Supreme Court upholds Trump-era tax on foreign earnings, skirting disruptive ruling

[BumRushDaShow]

Source: CBS News

Updated on: June 20, 2024 / 10:41 AM EDT


Washington — The Supreme Court on Thursday left intact an obscure tax enacted as part of Republicans' sweeping 2017 reform package that targets U.S. taxpayers with shares of certain foreign corporations.

The court ruled 7-2 that the so-called mandatory repatriation tax, or MRT, is constitutional under Article I and the 16th Amendment, rejecting a challenge from a Washington couple, Charles and Kathleen Moore, who claimed the provision was outside the bounds of the Constitution. Justice Brett Kavanaugh wrote the majority opinion. Justices Clarence Thomas and Neil Gorsuch dissented.

"[T]he 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," Kavanaugh wrote. "This Court's longstanding precedents, reflected in and reinforced by Congress's longstanding practice, establish that the answer is yes."

The court's decision is a narrow one, but in declining to disturb the tax, the justices avoided closing the door for now on Democrats' proposals to impose taxes on the nation's highest earners. Kavanaugh stressed that the court's analysis doesn't address the issues that would be raised by taxes on holdings; wealth or net worth; or taxes on appreciation.

Read more: https://www.cbsnews.com/news/supreme-court-tax-decision-moore-v-us/

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Link to SCOTUS RULING (PDF) - https://www.supremecourt.gov/opinions/23pdf/22-800_jg6o.pdf

Article updated.

Original article/headline -

Supreme Court upholds Trump-era tax on foreign earnings

June 20, 2024 / 10:07 AM EDT


Washington -- The Supreme Court on Thursday left intact an obscure tax enacted as part of Republicans' sweeping 2017 reform package that targets U.S. taxpayers with shares of certain foreign corporations.

The court ruled 7-2 that the so-called mandatory repatriation tax is constitutional under Article I and the 16th Amendment. Justice Brett Kavanaugh wrote the majority opinion.

"[T]he 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," Kavanaugh wrote.

"This Court's longstanding precedents, reflected in and reinforced by Congress's longstanding practice, establish that the answer is yes."

[bucolic_frolic]

1. ? So International shares are now taxed more than domestic?

undistributed income? So we're going to be taxed as income on income we don't actually receive? This seems a really BFD. Very few corporations distribute all their income. There could be income 2 or 3 or more times behind the $50 annual dividend one receives. Which btw is already taxed with a penalty for foreign ownership if it's a French company. So France takes more, US takes more, soon there's nothing left.

[CaptainTruth]

5. As I understand it, it's not a tax on share value or dividends.

AP did a pretty good job of explaining it:
"The law, passed by a Republican Congress and signed by then-President Donald Trump, includes a provision that applies to companies that are owned by Americans but do their business in foreign countries. It imposes a one-time tax on investors’ shares of profits that have not been passed along to them, to offset other tax benefits."

So, as I understand it, it only applies to foreign subsidiaries of US companies, & it only applies to profits that should have been repatriated to the US & distributed to US investors but weren't, aka foreign profits that US companies leave stashed overseas to avoid US taxes on repatriated income.

Now, I don't know:
1) How the IRS puts a total dollar value on "profits that should have been repatriated to the US & distributed to US investors but weren't," &
2) I also don't know why the IRS isn't going after the companies themselves to pay taxes on that "should have been repatriated & distributed but wasn't" income instead of investors.

As for item 2, it's quite possible the IRS IS going after the companies & I just don't know about it. I can't speak to that.

https://apnews.com/article/supreme-court-wealth-tax-5a13417bd5ae41f7d150ac596f7c51d0

[LAS14]

2. Where can I find out how individual judges voted?

I tried Google, and found a database which is hopelessly complicated. Is there an easy way to get this info? The vote was 7 to 2. It's interesting.

[BumRushDaShow]

3. From here

https://www.scotusblog.com/case-files/cases/moore-v-united-states-3/

Judgment: Affirmed, 7-2, in an opinion by Justice Kavanaugh on June 20, 2024. Justice Jackson files a concurring opinion. Justice Barrett filed an opinion concurring in the judgment, in which Justice Alito joined. Justice Thomas filed a dissenting opinion, in which Justice Gorsuch joined.

[LAS14]

4. Thanks! I'll save this link. nt

[cstanleytech]

6. I wonder what vacation Thomas earned for his opposition this time.