Shocker! Supreme Court Actually Makes Good Ruling on Taxing the Rich

The U.S. Supreme Court just shot down a case that conservative lawyers hoped would kill any future proposals of a wealth tax. 

The court ruled Thursday on Moore v. United States, a case that challenged an obscure section of the 2017 Tax Cuts and Jobs Act, which was passed by a Republican-led Congress and signed into law by former President Donald Trump. 

The law massively overhauled the federal tax code, but this particular case was about a one-time tax called the Mandatory Repatriation Tax, or MRT, which targeted people who owned more than 10 percent of a foreign company. The MRT made a lot of rich people mad because companies will often avoid actually paying out dividends to their shareholders, in an attempt to shield them from being taxed.

Before the court, the plaintiffs, Charles and Kathleen Moore, were portrayed as some of the few investors unfairly affected by the one-time tax. As investors in the Indian farm equipment manufacturer KisanKraft, the couple paid up a $15,000 tax and then promptly sued to get their money back, arguing that the tax violated the Sixteenth Amendment, which forbids Congress from taxing “unrealized income” (income that has not passed directly into a taxpayer’s hands).

In reality, their lawyers completely misrepresented the extent of the couple’s financial involvement in KisanKraft, in a blatant attempt to devise a case that, if things went their way, could prevent a similar tax from being levied against the wealthy in the future. It wouldn’t be the first time a case heard before the Supreme Court was crafted on lies. 

Either way, the justices didn’t buy it, and overwhelmingly rejected the bid 7–2. 

“The precise and narrow question that the Court addresses today is whether Congress may attribute an entity’s realized and undistributed income to the entity’s shareholders or partners, and then tax the shareholders or partners on their portions of that income,” Justice Brett Kavanaugh wrote in the majority ruling. “This Court’s longstanding precedents, reflected in and reinforced by Congress’s longstanding practice, establish that the answer is yes.”

Kavanaugh stated that “the MRT does tax realized income—namely, income realized by the corporation, KisanKraft. The MRT attributes the income of the corporation to the shareholders, and then taxes the shareholders (including the Moores) on their share of that undistributed corporate income.”

Justices Clarence Thomas and Neil Gorsuch dissented, which shouldn’t be too surprising given Thomas’s questionable financial ethics and close ties to rich and powerful conservatives. 

Kavanaugh insisted that the ruling did not resolve questions surrounding a tax based on holdings, wealth, or net worth. “Those are potential issues for another day, and we do not address or resolve any of those issues here,” he wrote. 

With this ruling, the court has left a door open for congressional Democrats to install a tax on the nation’s highest earners, a plan that stands in stark contrast to Trump’s efforts to grant tax cuts to the rich and install trickle-down economic policy. Ironically (and shortsightedly), his platform has sent billionaires flocking to support the former president, a decision that may ultimately doom them.