In 2017, the Tax Cuts and Jobs Act was enthusiastically signed into law by former President Donald Trump. This legislation, lauded by both Trump and conservatives, was seen as a significant economic booster. However, tucked away within this bill was an obscure provision that has now become the focal point of a Supreme Court case with extensive ramifications.
The case centers on a requirement that compels American-owned companies conducting business overseas to pay a one-time tax on investors' share of profits not distributed to them. Charles and Kathleen Moore found themselves facing a $15,000 tax bill for their investment in an Indian company named KisanKraft Machine Tools Private Limited. It's important to note that the Moores argued that they never received any payments or dividends from the company.
McClain: Trump’s pro-growth/pro-worker economy created by the tax cuts and jobs act.. combined with the unparalleled response to the pandemic created the fastest economic recovery in history pic.twitter.com/LDNutklcwj
— Acyn (@Acyn) March 9, 2023
Determined to challenge this, the Moores filed a lawsuit with the assistance of the Competitive Enterprise Institute, a pro-free market organization. Their contention is that this tax obligation violates the Constitution, specifically referencing the 16th Amendment, which empowers Congress to tax income derived from any source. They question how they can be mandated to pay income taxes when they haven't received any income to begin with.
The Supreme Court is scheduled to hear the Moores' case on December 5, and legal experts suggest that the outcome could carry implications extending beyond the current tax code. If the court rules in favor of the Moores, it might potentially preclude various forms of wealth taxes. Predictably, there are those who oppose the Moores' claims, with University of Michigan Law School professor Reuven Avi-Yonah contending that their original assertion is "replete with falsehoods."
It comes as no surprise that the Moores' case has attracted attention and conjecture. As Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, underscores, the Supreme Court's decision to take up this case could be signaling Congress to refrain from enacting any form of billionaire tax. It embodies a classic battle between those seeking to safeguard individual freedoms and those persistently striving to impose additional taxes and regulations. Let's hope that the Supreme Court renders the right judgment and upholds the principles that have made this country great.