The Supreme Court heard oral arguments in Moore v. the United States, a case challenging the constitutionality of a tax provision under former President Trump’s tax overhaul.
The provision, Section 965, imposed a one-time transition tax on foreign earnings accrued by certain overseas corporations owned by U.S. shareholders.
The plaintiffs argue that the tax violates the 16th Amendment. (Trending: Tucker Carlson Reveals ‘Secret’ Project He’s Been Working On For Months)
Gary Scanlon, a principal in the international tax group within KPMG’s Washington National Tax office said, “The mandatory repatriation tax is the subject of this litigation.”
“But you can tell from the oral arguments, from the briefing, that there’s a real focus on a wealth tax and whether that wealth tax, if ever passed by Congress, is constitutional,” he explained.
The Moores are disputing a portion of the 16th Amendment. Enacted in 1913, it says: “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.”
“If you haven’t received any income, how can you be required to pay income taxes?” Charles Moore said in a video shared by the Competitive Enterprise Institute.
Adding, “It seemed, to both of us, unconstitutional.”
“A decision for the Moores would necessitate a rethink of, quite frankly, the entire tax code,” Scanlon said.
“That really, to cut to the chase, in the oral arguments, that was clearly a concern articulated by the justices themselves,” he continued.
“A lot of the tax code would be unconstitutional if [Moore] prevailed,” Paul Ryan warned recently.
“I think it’s a misguided challenge,” he added.
If successful, the case could lead to substantial revenue losses for the government and potentially render parts of the tax code unconstitutional, impacting the broader concept of wealth tax.
The justices seemed skeptical but also cast doubt on the prospect of striking down the tax, suggesting a narrow ruling might be issued.
Justice Brett Kavanaugh said, “Even assuming or leaving open whether realization is a constitutional requirement, there was realized income here to the entity and then it’s attributed to the shareholders in a manner consistent with how Congress has done that, and this court has allowed.”
A decision is expected by next June.
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