▶ Watch Video: Supreme Court hears case on government having the power to tax unrealized income Washington.
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.”
The tax at the center of the case, known as Moore v. U.S., is imposed one time on U.S. taxpayers who hold shares of certain foreign corporations. A Washington state couple, Charles and Kathleen Moore, challenged the measure after they were hit with a nearly $15,000 tax bill for 2017 as a result of the law, which required them to pay levies on their share of reinvested lifetime earnings from an India-based company called KisanKraft Tools.
