The Supreme Court debated a case involving a Washington state couple’s $15,000 tax bill, which could have significant implications for taxing unrealized income.
The couple argues that their investment in an Indian corporation should not be considered taxable income since they haven’t received dividends.
The case could impact the taxation of wealthy Americans, potential wealth taxes, and other tax provisions. (Trending: Joe Biden Admits He’s ‘Not Sure’ About Running If Trump Wasn’t)
The justices seemed cautious about issuing a sweeping ruling and focused on crafting a narrow decision.
Concerns were also raised about the ethical considerations of the case.
“We don’t have to agree with you on that for you to prevail,” said Justice Brett Kavanaugh.
“Why is it that you think we can decide for you without putting any of those kinds of very established taxation schemes at risk?” Justice Elena Kagan pressed.
“If you haven’t received any income, how can you be required to pay income taxes?” Charles Moore said.
“It seemed, to both of us, unconstitutional.”
Senator Elizabeth Warren’s wealth tax proposal and President Biden’s billionaire’s tax were mentioned, but the justices showed reluctance towards considering a wealth tax.
The case prompted a large number of amicus briefs and concerns over its potential impact on tax provisions.
“There is no valid reason for my recusal in this case,” Justice Samuel Alito wrote.
“We are required to put favorable or unfavorable comments and any personal connections with an attorney out of our minds and judge the cases based solely on the law and the facts. And that is what we do.”
“I am quite concerned by the potential implications,” he said.
“You say that if we rule in petitioners’ favor, then large, important pieces of the Tax Code will also logically fall. And I think that’s a fair argument.”
“But I think it’s also a fair argument to do the same thing with your position, and I want to understand the limits of your position.”
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