The Biden administration continues to experience difficulties with the Supreme Court. In light of the court’s recent decision that President Joe Biden’s $430 billion transfer of student debt was illegal, the government’s plans to tax the affluent may soon be overturned.
Moore v. United States may have the greatest impact on Biden, despite the fact that the Supreme Court will hear cases this autumn concerning the right to bear arms, the jurisdiction of federal agencies, and whether or not the phrase “Trump too small” can be trademarked. This debate concentrates on whether or not Biden’s frequently expressed desire for a wealth tax could be implemented.
“Reward work, not just wealth. Pass my proposal for a billionaire minimum tax,” Biden said during the State of the Union address earlier this year. “Because no billionaire should pay a lower tax rate than a school teacher or a firefighter.”
“Biden later proposed a 25% annual tax on all gains to wealth in excess of $100 million in a given year, including unrealized capital gains which aren’t currently taxable. The White House says that the tax would only apply to the top 0.01% of the highest earners. While the proposal faces long odds with a Republican-controlled House of Representatives, it could be nixed permanently if the high court rules such a tax is unconstitutional,” The Washington Examiner reported.
“The specifics of the Moore case don’t involve huge amounts of money, but center around the same issues of taxation and the definition of the word ‘income,’” the outlet added. “Charles and Kathleen Moore, a Washington state-based couple, made a nearly $40,000 investment into an Indian company in 2005 and never received any money or other payments from the company even though it made a profit every year.”
The source also said:
Under the 2017 tax reform law, they learned that they were subjected to a mandatory repatriation tax of $14,729. They paid that amount and then filed suit seeing a refund and claiming that the tax violates the constitution’s apportionment clause. The Sixteenth Amendment authorizes Congress to “lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states.” That means that the federal government cannot tax stock gains, which are the source of wealth for many billionaires unless those stocks are sold.
Progressive leaders have for years railed against this state of affairs, with Sens. Bernie Sanders (I-VT), Elizabeth Warren (D-MA), and Finance Committee Chairman Ron Wyden (D-OR) supporting a tax on wealth itself rather than direct income. An appeals court ruled that the Moores could be taxed this way, saying “there is no constitutional prohibition against Congress attributing a corporation’s income pro-rata to its shareholder.” But the Supreme Court could reverse that ruling, rendering the repatriation tax and future wealth-based taxes off-limits at the federal level.
“The Sixteenth Amendment allows the federal government to impose income taxes without apportioning them among the states,” said Cato Institute research fellow Thomas Berry. “But courts have always limited those taxes to that word, ‘income,’ and said that word is meaningful. It doesn’t just mean whatever the government wants it to mean.”
Along with the Chamber of Commerce and Americans for Tax Reform, the Cato Institute is one of the organizations that have filed amicus briefs in support of the Moores. It is probable that hearings will commence in October.
Scholars have long disagreed over whether unrealized capital gains can be deemed income.
Berry proposes that Biden and other Democrats attempt to raise traditional income taxes, which he is also attempting to do, in addition to imposing tariffs on imports.
Biden frequently brings up the notion of a tax on the wealthy in his speeches, asserting that their average tax burden of just 3% of income is lower than that of middle-class workers.
“You can never predict for certain,” Berry said, ” but I think the justices will be concerned about setting a new precedent here and opening the door to a lot of taxes that we’ve never seen before at the federal level.”
This autumn, the Supreme Court will hear a number of cases that offer promising opportunities to constrain the federal administrative state.
The court will decide the practice of deferring to agency interpretations of the laws they are charged with enforcing, as well as cases challenging the constitutionality of an agency funding scheme that is exempt from congressional appropriations and regular congressional oversight.
In addition, the court consented to examine a case that would reinstate jury trials for a category of civil disputes that are presently exclusively heard by judges employed by administrative bodies. According to the Daily Signal, SEC v. Jarkesy, which may restore the right to a jury trial in administrative civil matters, may be one of the most significant cases in the upcoming term.