The World We Want Is Mostly Constitutional

On November 3, Californians vote on Proposition 40, the billionaire tax.

According to the Legislative Analyst’s Office, billionaires who were California residents on January 1, 2026 would owe a one-time tax equal to 5% of their net worth, due in 2027. Ninety percent of the money goes to health care.

Opponents didn’t just campaign against it. They put counter-measures on the same ballot. One, Proposition 42, “Prohibits New State Personal Property Taxes and Certain Retroactive State Taxes.”

Put the two side by side and you get the questions this series keeps running into. Can a government tax wealth nobody has sold?

Can it decide who owes based on where you lived on a past date? Who pays for the floor, and who sets its rules?

Part 20 ended with a charter for one Foundry. Nearly everything in this series runs on a charter or a law, from the tax formula to the town trusts.

So I want to do something I should have done earlier: hold my own proposals up against the Constitution, as the founders wrote it and as the Supreme Court reads it today, and against the Enlightenment ideas behind it.

A quick note first. I’m not a lawyer, and this isn’t legal advice. It’s a reader’s guide to the text and the cases, with links so you can check my work.

The short version

Here’s the scorecard.

• Universal basic goods and services: constitutional.
• One formula for the income tax, with two rates, and gains taxed when they’re sold or at death: constitutional.
• A minimum tax on unrealized gains, from my first sketch: an open question, and a risky one. The formula dropped it.
• Trusts owned by residents, one person one vote: constitutional, with one design rule.
• A standard remix license: constitutional. The fight is over policy, not power.
• Parties and guilds: constitutional. The risk is antitrust law, and open admission is the fix.

And two things I learned I had wrong, which I’ve since fixed:

1. In Part 5: Every Town Can Own Its Own Power Plant and Chip Fab, I originally said builders “could be compelled to” gift infrastructure back. Without payment, that’s very likely an unconstitutional taking.
2. In my first tax sketch, now in Every Spending Bill Should Show Up on Your Paycheck, I originally proposed replacing payroll taxes with federal taxes on land values. At the federal level, a land tax runs straight into the Constitution’s apportionment rule.

Universal basic goods: the founders’ own floor

The Constitution gives Congress the 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” (Article I, Section 8).

The founders fought over what “general Welfare” meant. As the Supreme Court summarized it in United States v. Butler (1936), Madison read it as a reference to Congress’s other listed powers. Hamilton read it as a separate power to tax and spend for the general welfare.

The Court picked Hamilton: “the reading advocated by Mr. Justice Story is the correct one,” and Story had espoused “the Hamiltonian position.” (Butler still struck down the farm program in front of it, on other grounds. But the reading stuck.)

A year later, Helvering v. Davis (1937) upheld Social Security. “The discretion belongs to Congress, unless the choice is clearly wrong.” And a line that could have been written about machine labor: “Nor is the concept of the general welfare static.”

Nothing in either case turns on cash versus the things themselves. And the founders provided things. In 1798, Congress passed An Act for the relief of sick and disabled Seamen.

Ship masters paid “twenty cents per month” per seaman into a fund for sick sailors’ care and, in time, marine hospitals. Federal health care, in kind, nine years after the Constitution took effect.

The Land Ordinance of 1785 reserved “the lot No. 16 of every township, for the maintenance of public schools.” The Northwest Ordinance (1787) declared the region’s navigable waters “common highways and forever free.”

Schools, waterways, health care. That’s a floor.

One real limit: Congress can’t order states or their officers to run a federal program (Printz v. United States, 1997).

So when I wrote in Part 4: Quests Should Replace Corporations that “the government guarantees the floor,” the federal piece has to be run federally, or joined voluntarily.

Verdict: constitutional. Whether to build the floor is a political question, not a constitutional one.

One formula, two rates: the easy one

My first tax sketch proposed one flat rate: “For ten years, tax every dollar of income above a universal exemption at a single 30% rate.”

Every Spending Bill Should Show Up on Your Paycheck has since replaced it. One formula sets the rate each year, capital pays a higher rate than wages, and gains are taxed when they’re sold or at death.

The 16th Amendment (1913) lets Congress tax “incomes, from whatever source derived, without apportionment among the several States.”

The Court upheld the first modern income tax under it in Brushaber v. Union Pacific (1916). Nothing in the text requires graduated rates, and nothing forbids an exemption, or a higher rate on capital than on wages. Today’s code already taxes the two differently, just in the other direction.

Verdict: constitutional. The hard part is Congress, not the courts.

The unrealized-gains tax: the open question

Same sketch: “For the largest fortunes, add a minimum tax on unrealized gains, so that ‘buy, borrow, die’ ... stops working.”

This is where a lot of summaries get it wrong.

In 1920, Eisner v. Macomber said, in its official syllabus, “Mere growth or increment of value in a capital investment is not income.”

In 2024, the Court took a case that could have settled it: Moore v. United States. It upheld the tax at issue, 7–2. But read the opinion itself.

On whether income must be realized before it’s taxed: “We do not decide that question today.” On its own reach: “our holding today is narrow.” On the rest: “Those are potential issues for another day.”

Then count the separate opinions.

Justice Barrett, joined by Justice Alito, took the question of whether the 16th Amendment lets Congress “tax unrealized sums without apportionment among the states,” and wrote: “The answer is straightforward: No.” Justice Thomas, joined by Justice Gorsuch, dissented: “Sixteenth Amendment ‘incomes’ include only income realized by the taxpayer.”

That’s four Justices on record. One more vote would make it a majority.

Verdict: an open question, leaning risky. I’d keep the goal and change the tool:

1. Tax gains when they’re realized, with interest for the years of deferral. The tax code already does this for certain foreign funds, adding a “deferred tax amount” (26 U.S.C. §1291).
2. End the step-up at death. Heirs now inherit assets at their value on the day of death (26 U.S.C. §1014), so a lifetime of gains goes untaxed. Change that, and the gain is taxed when the heirs sell.
3. Tax the transfer at death. The Court upheld the federal estate tax in New York Trust Co. v. Eisner (1921), where Justice Holmes wrote that “a page of history is worth a volume of logic.” That option has an Enlightenment pedigree, which I’ll get to.

The formula in Part 18 takes the first two: gains are taxed when they’re sold, or when they pass on at death, at the capital rate.

And California? The apportionment rule binds Congress, not states. As Justice Barrett wrote in Moore, “By design and in fact, the apportionment rule has left property taxation primarily to the States.”

That’s why California can try a wealth tax that Congress probably can’t. Whether Prop 40 survives other challenges is a separate question, and I won’t guess.

Trusts and the right to leave

In Part 5: Every Town Can Own Its Own Power Plant and Chip Fab, I proposed trusts that own each town’s infrastructure, where your membership is your universal basic capital share. You become a member by living there.

You can’t sell your membership. And if you move, it moves with you, because you should always be free to leave.

Three points.

One person, one vote is the gold standard. In Avery v. Midland County (1968), the Court held that “Local units with general governmental powers” can’t use districts of “substantially unequal population.” Equal votes clear that bar easily.

Trusts need a home in state law. Local governments are “political subdivisions of the State” (Hunter v. City of Pittsburgh, 1907). So a trust either gets a state charter or takes a private form, like the member-owned electric co-ops in Keep Money, Add a Second Ledger.

Benefits can’t scale with how long you’ve lived there. Alaska once paid its oil-fund dividend in units, one “for each year of residency.”

In Zobel v. Williams (1982), the Court struck it down for creating “fixed, permanent distinctions” among “concededly bona fide residents, based on how long they have been in the State.”

California tried a version, too, paying new residents only what their old state paid for their first year. In Saenz v. Roe (1999), the Court said new residents have “the right to be treated like other citizens of that State.”

So a residency stake, held for as long as you live there, works if it means living there now, not seniority. Day one counts the same as year twenty. Private co-ops may fall outside these cases, but I’d keep the rule anyway.

Verdict: constitutional, with that rule. Portable membership doesn’t fight the right to travel. It advances it.

The remix license: Jefferson already made the argument

In Remix Will Kill the Copy, Not the Creator, I proposed a standard remix license with a set rate, and collecting bodies, run by guilds, that pool what models owe and pay it out to the people whose work they learned from.

Congress has the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries” (Article I, Section 8).

Notice the order. Progress is the goal. Exclusive rights are the tool, for limited times.

Thomas Jefferson spelled it out in an 1813 letter to Isaac McPherson: “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”

Society may grant exclusive rights “as an encouragement,” but “this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody.”

Congress already writes compulsory licenses. Under 17 U.S.C. §115, anyone can get “a compulsory license to make and distribute phonorecords” of a released song, at rates “binding on all copyright owners.”

That’s how cover songs work. The honest limit: the arrangement “shall not change the basic melody or fundamental character of the work.” A true remix license goes further than anything on the books.

There’s also a levy that doesn’t require proving anyone copied anything. The Audio Home Recording Act charges “2 percent of the transfer price” on digital audio recorders and pays it out to creators (17 U.S.C. §1004). That’s the closest model for a royalty on AI models.

Free speech isn’t a problem either. Copyright law has “built-in First Amendment accommodations” (Eldred v. Ashcroft, 2003), fair use stays (17 U.S.C. §107), and a remix license adds lawful paths to speech.

The real fight is policy. In June 2025, Judge William Alsup ruled in Bartz v. Anthropic that training on lawfully bought books was fair use, but keeping a library of pirated copies was not. In July 2026, the court gave final approval to a $1.5 billion settlement, about $3,000 per book.

(Full disclosure: I write this series with help from Claude, which Anthropic makes.) That’s a per-work rate, set after years of litigation. A remix license would set one up front.

Not everyone agrees. The U.S. Copyright Office’s 2025 report on AI training said “a compulsory licensing regime for AI training would have significant disadvantages,” and leaned toward voluntary and collective licensing.

That’s a fair argument. It’s just not a constitutional one.

Verdict: constitutional. One caution: applying a new license to works already under copyright could invite a takings claim, and that question isn’t settled.

Parties and guilds: free to form, not free to fix prices

The First Amendment protects “the right of the people peaceably to assemble” (Bill of Rights), and the Court has protected the privacy of group membership since NAACP v. Alabama (1958).

Legally, a party is just a partnership or a single-purpose LLC, like the film-production model in Part 4.

Guilds are where the risk lives, and it’s in a statute. The Sherman Act makes illegal “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade” (15 U.S.C. §1).

Two cases draw the line.

• In Goldfarb v. Virginia State Bar (1975), lawyers’ minimum fee schedules were “a classic illustration of price fixing.”
• In North Carolina State Board of Dental Examiners v. FTC (2015), a board run by dentists sent cease-and-desist letters to teeth whiteners after dentists complained the nondentists “were charging lower prices.” Because its decisionmakers were “active market participants,” the board lost antitrust immunity without “active supervision by the State.”

Adam Smith saw this coming in The Wealth of Nations (1776): “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

And: “The exclusive privilege of an incorporated trade necessarily restrains the competition.”

This is why I said a guild should “keep its doors open to anyone who wants to apprentice.” Open admission isn’t just kinder than the Writers Guild model I complained about. It’s the version the law already favors.

So the line is simple. Guilds can train, certify, document their craft, and collect royalties for members; collective blanket licenses get a full review rather than automatic condemnation (BMI v. CBS, 1979). Guilds can’t fix what members charge, or keep newcomers out.

Verdict: constitutional. Stay open, don’t fix prices.

What I learned, and fixed

Here’s the candid part. Checking my own proposals against the Constitution turned up two sentences that didn’t hold up.

I’ve rewritten both in the essays themselves. Here’s what was wrong, and why.

1. “Compelled” to gift it back

In Part 5, asked why anyone who builds infrastructure would give it away, I originally wrote: “They could be compelled to, or everyone could agree this is the world we want, and decide to do it.”

The first half of that sentence doesn’t survive the Fifth Amendment: “nor shall private property be taken for public use, without just compensation.”

In Horne v. Department of Agriculture (2015), the government made raisin farmers hand over part of their crop as a condition of selling the rest.

The Court called it a taking: “The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home.”

Selling produce, it said, is not a special benefit “that the Government may hold hostage, to be ransomed by the waiver of constitutional protection.” And Cedar Point Nursery v. Hassid (2021) held that even a rule letting outsiders onto private land can be “a per se physical taking.”

Forcing a company to hand over a power plant it owns is about as clear a taking as there is.

Making it the price of a permit fails too: permit conditions have to be proportional to a project’s impacts, a rule the Court applied to legislatures, too, in Sheetz v. County of El Dorado (2024).

The fix: write the handover into the deal before anything gets built. That’s a build-operate-transfer contract, the model I pointed to in A Floor for Everyone, a Frontier for Anyone.

A builder who agrees up front to transfer the asset after a capped return isn’t having property taken. They’re keeping a promise.

For infrastructure that already exists, communities can buy it back at fair value. The Court reads “public use” broadly (Kelo v. City of New London, 2005), so a compensated buyout is easy to defend.

To be fair to my past self, my roadmap already had the right version: “the gift-back written into the charter from day one.” It’s in Stage 3 of Plan for the Bad Transition. That’s the one to keep.

So Part 5 now reads: “They could agree to it up front, as a condition of public financing, or everyone could agree this is the world we want, and decide to do it.”

2. A federal tax on land

In my first tax sketch, which Part 18 has since rebuilt, I originally wrote: “Phase down payroll taxes, which effectively charge a fee for hiring a human. Replace them with taxes on things that stay scarce no matter how productive machines get: land values, natural resources, and permits for scarce compute.”

In context, that’s a federal plan, and land values are the problem.

The Constitution says: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census” (Article I, Section 9).

Direct taxes have to be split among the states by population, so a poorer state would owe the same total as a richer state of the same size, at a much higher rate. That makes a direct tax nearly impossible to design.

And a tax on land is the textbook direct tax. The syllabus of Pollock v. Farmers’ Loan & Trust Co. (1895), summing up nearly a century of cases, says “taxes on land are conceded to be direct taxes.”

The 16th Amendment fixed Pollock on income. It didn’t touch land.

The fix: keep land-value taxes state and local, where property taxes already live. At the federal level, use tools that need no apportionment: excises on natural resources, royalties on federal land, auctions for compute permits like the FCC’s spectrum auctions by “competitive bidding” (47 U.S.C. §309(j)), and a tax on large estates.

Part 18 now says land values should be “taxed by states and cities, where the Constitution allows it.”

One honest footnote: ship masters in that 1798 seamen’s act were “authorized to retain out of the wages of such seamen” what they paid.

The first federal health program ran on a payroll deduction. I still think taxing human labor makes less sense every year machines do more of it, but payroll taxes aren’t un-American.

The ideas underneath

John Locke grounded property in labor in his Second Treatise of Government (1689), with a condition: it holds “at least where there is enough, and as good, left in common for others.” That’s the moral case for a floor, and for trusts over things nobody made, like land.

Thomas Paine went further in Agrarian Justice (1797). Since “it is the value of the improvement only, and not the earth itself, that is individual property,” every landowner “owes to the community a ground-rent.”

He proposed a national fund paying every person “fifteen pounds sterling” at twenty-one, plus a pension later in life. “It is not charity but a right, not bounty but justice.”

Here’s the detail people miss. Paine justified the fund with ground-rent, but he proposed collecting it at death, when “property is passing by the death of one person to the possession of another.”

His plan was closer to an estate tax than a land tax, which happens to be the constitutionally safe version.

Adam Smith agreed that “Ground-rents are a still more proper subject of taxation than the rent of houses.” He also beat me to the critique of the corporation: directors of joint-stock companies were “the managers rather of other people’s money than of their own.”

Henry George, a 19th-century heir to these ideas, made ground-rent a program in Progress and Poverty (1879): “It is not necessary to confiscate land; it is only necessary to confiscate rent.”

That’s the takings-safe version of the gift-back. You don’t seize the asset. You capture the rent.

James Madison warned in Federalist No. 10 (1787) that “the most common and durable source of factions has been the various and unequal distribution of property.”

His answer was scale: “Extend the sphere, and you take in a greater variety of parties and interests.” Small trusts are where Madison would worry about faction most. The federal floor is his extended sphere.

Montesquieu warned in The Spirit of Laws (1748) that when legislative and executive powers are united in one body, “there can be no liberty.” A trust that owned the power plant, set the rules and settled disputes would worry him. That’s why the town trust’s charter is narrow: it can’t police, tax or zone, guilds run the standing services, and the regional federation runs the market between towns (Part 5).

And Alexis de Tocqueville, who visited in the 1830s, saw what the system produced.

In Democracy in America (Volume 2, 1840), he wrote that “Americans of all ages, all conditions, and all dispositions, constantly form associations.” Parties and guilds are a very American idea.

Objections

Isn’t quoting the founders cherry-picking? They also protected slavery and limited who could vote.

Yes, and that matters. The Constitution as originally conceived excluded most of the people living under it. It got better through amendments, including the 14th, which gives us the equal-protection and right-to-travel cases above.

I’m not arguing the founders were right about everything. I’m arguing they built a system that can be improved, and that most of the tools for the world we want are already in it.

Doesn’t Prop 40 prove states can do this?

It proves states have room Congress doesn’t. It doesn’t prove a wealth tax works.

Wealth can move. That’s exactly why the Georgists liked land: it can’t leave.

Doesn’t the Takings Clause make the gift-back impossible?

No. It makes the forced gift-back impossible. A gift-back agreed to up front, or a buyback at fair value, is fully constitutional.

The Fifth Amendment protects what builders build, and Locke would say their labor earned it. Good. That’s an incentive to build.

A steering wheel, written in 1787

Doomers want a brake. Accelerationists want a gas pedal. Worldbuilders want a steering wheel.

The founders built a steering wheel. Not one driver, but a set of balanced powers, each checking the others. As Federalist No. 51 (1788, usually credited to Madison) put it: “Ambition must be made to counteract ambition.”

That’s what I’ve been designing, too, for an age of machine labor. A federal floor, so no town gets left behind. Trusts, so the machines that make the essentials belong to the places they serve.

Guilds, open to anyone, so no craft gets captured. Parties, so organizations end when the quest does. And a remix license, so ideas keep spreading the way Jefferson said they should.

Two of my sentences needed rewriting, and now they’re rewritten. The rest was already in the founders’ toolbox.

A floor for everyone. A frontier for anyone. The Constitution has room for both.

The courts are one test. The industry building the machines is another, so next, I write to it directly: Part 22: Five Takes the AI Industry Needs to Ingest.