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How a Supreme Court case might affect federal wealth tax proposals

The US Supreme Court Building in Washington, D.C., on June 27, 2023.

Kevin Deitch | Getty Images

The Supreme Court will soon hear a case that could affect broad swaths of US tax law, corporate revenue and federal wealth tax proposals.

The case, Moore v. United States, is slated for the court’s next session and challenges the tax imposed by President Donald Trump’s 2017 tax reform. The tax, originally designed as a transitional tax, is intended to collect a one-time tax from US corporations that defer income By keeping profits in foreign subsidiaries.

The plaintiffs are fighting the taxes incurred through their investment in the India-based company by arguing over the definition of income. But experts say the Supreme Court’s decision could have wider implications.

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The case revisits the law’s definition of income, as set forth in the Sixteenth Amendment, and whether individuals and businesses must “earn” or receive profits before incurring taxes on unrealized gains. It’s a question lingering amid the billionaire’s previous tax proposals.

While experts say Trump’s 2017 tax works differently from a wealth tax, concerns remain about Moore’s case. said Amanda Parsons, an assistant professor at the University of Colorado School of Law who specializes in tax law.

“This is just a very dangerous thing they’re playing with here,” she added.

What does the case mean for companies

said Chye-Ching Huang, executive director of the Tax Law Center at New York University Law.

“This would create uncertainty and confusion about the correct tax treatment,” she said.

Other experts point to the potential effects on corporate tax revenues in the future.

said Susan Morse, professor of law and associate dean for academic affairs at the University of Texas at Austin Law School.

“It’s a good example of how hard it is to resist the corporate tendency and pressure to try to avoid taxes and reduce their tax bills,” she said.



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