The Supreme Court on Thurs rejected a challenge to an obscure provision of rump’s 2017 tax package.
The one-time tax on offshore earnings helped fund the massive tax cut permitted under #Congress’s limited powers of #taxation.
Some viewed the lawsuit as an effort to preemptively block Congress from creating a #WealthTax.
An unusual political coalition defended the offshore-earnings tax, from the #Biden admin to #conservatives including fmr House speaker #PaulRyan. Not because they favor a #WealthTax, but because they worry a ruling against one little-known provision could undermine vast swaths of existing #taxes on #investments, partnerships & foreign #income, which together raise billions or even trillions in revenue.
The #lawsuit was initiated by a Washington couple backed by the Competitive Enterprise Institute, an #AntiRegulatory advocacy group. Charles & Kathleen Moore were subject to $15k in taxes because of the 2017 #law, springing from #investments they had made in a company based in India that supplies equipment to small-scale farmers. The law created a 1-time #tax on certain #offshore earnings that had previously been exempt from #taxation unless the taxpayer brought the money back to the US. #SCOTUS
The Moores said they never earned money from the #investment & sued the federal govt for a refund. The district court dismissed the case, & the 9th Circuit upheld that decision, saying the tax was w/in #Congress’s power & permitted under the 16th Amendment regardless of whether the Moores took in,or “realized,” #income.
The #tax §965 is forecast to raise >$300B over 10yrs. Some corporations have already paid billions under it; if struck down the govt might have to issue billions in refunds. #law