The ink was barely dry on the Supreme Court decision in Moore before taxpayers, tax policy groups, and tax professionals began weighing in—and for good reason. A case challenging the 2017 law requiring companies to pay tax on previously untaxed foreign profits—the Mandatory Repatriation Tax (MRT)—had the potential to shake up the tax world.
But, in a closely watched case, a divided Supreme Court ruled, 7-2, that the MRT does not exceed Congress’s constitutional authority.
(You can read more about the ruling here.)
From policy watchers to tax attorneys and accountants, responses were swift. Following are some of the notable responses to the ruling.
Tax Law Center
Chye-Ching Huang, Executive Director of the Tax Law Center at NYU Law, issued the following statement:
“The Supreme Court heeded the warnings of a broad and bipartisan set of tax experts and roundly rejected the Moores’ radical theory that threatened to upend central pillars of the tax system.
Instead, and as the Tax Law Center and other amici urged, the Court exercised restraint by deciding only what it had to: that Congress could tax the Moores on their share of income realized at the corporate level. The Court declined to use this case to impose, as the Moores had requested, a novel constitutional requirement for income to be “realized” before it is taxed; that would have left, the majority noted, a “blast radius” cutting through the existing tax code.
Today’s decision will allow Congress to continue to exercise its power to tax income to fund the government and to make sure that all taxpayers – including multinational corporations and wealthy taxpayers – pay their fair share.
Although the Court appropriately refrained from deciding questions that were not necessary to resolve this case, some of the justices in concurrence and dissent were less restrained – attempting to take a preemptive strike against wealth and mark-to-market taxes, and even casting doubt about decades-old parts of the tax code. But this language is not part of the majority and is not binding: the taxes and arguments that these justices address were not necessary to resolve this case, which means that these justices did not see full briefing on these issues or deal with how Congress might design and implement new taxes to address any constitutional questions.”
The Tax Law Center, based at NYU Law, brings a public interest perspective and strong legal expertise to consequential tax policy decisions. Tax Law Center and Professors Ari Glogower, David Kamin, Rebecca Kysar, and Darien Shanske submitted an amicus brief in Moore.
Patriotic Millionaires
Morris Pearl, the chair of the Patriotic Millionaires and a former managing director at BlackRock, Inc., released the following statement:
“We are relieved that the Supreme Court chose not to overreach in its Moore v. US decision. The plaintiffs’ patently absurd argument, based on incorrect and seemingly fabricated facts, threatened to upend the tax code and preemptively declare taxes on wealth and unrealized capital gains unconstitutional. The Court chose not to do so.
But we remain deeply alarmed for two reasons. First, it is now evident that four Supreme Court Justices are enthralled by the influence of billionaires. In their concurring opinion, Justices Barrett and Alito asserted that unrealized capital gains cannot be taxed, as did Thomas and Gorsuch in their dissent, which said there is a realization requirement for income tax. These Justices have now signaled their intention to declare taxes on wealth and unrealized capital gains unconstitutional.
Second, the Supreme Court should never have agreed to hear this case in the first place. Billionaires are shamelessly buying influence on the Court. While seven Justices rejected this specific attempt by plutocrats to avoid their patriotic duty, this does not change the fact that several members of the Supreme Court have corrupt relationships with billionaire benefactors looking to purchase outcomes on the Court.”
The Patriotic Millionaires are a group of high-net-worth business leaders and investors founded in 2010 to “build a stable, prosperous, and inclusive nation by promoting public policies based on the ‘first principles’ of equal political representation, a guaranteed living wage for all working citizens, and a fair tax system.” In addition to Pearl, members include filmmaker Abigail Disney, philanthropist Molly Munger (daughter of Charlie Munger), and cardboard magnate Dennis Mehiel.
ITEP (Institute On Taxation And Economic Policy)
ITEP Executive Director Amy Hanauer issued a statement, saying:
“Today’s ruling is a win for anyone who didn’t shelter income in offshore tax havens before 2018. It preserves close to $300 billion of tax revenue paid by some of the biggest and most profitable corporations in human history. If the Court had retroactively repealed this one-time tax, any other way of making up the resulting shortfall would have fallen far more heavily on middle-and-low-income families and small businesses.
The Supreme Court also could have taken an activist turn of the worst kind by preemptively ruling federal wealth taxes unconstitutional today. To its credit, the Court did not do so.”
ITEP is a non-profit, non-partisan tax policy organization. Since its founding in 1980, ITEP has provided policymakers, advocates, and the public with important information regarding state and federal tax policy.
Oxfam
Rebecca Riddell, Policy Lead for Economic and Racial Justice at Oxfam America, said:
“Today’s ruling in Moore v. US is a win for democracy and a loss for anti-tax crusaders who wanted the Court to make it harder to tax billionaires. It’s time for Congress to take action and ensure the super-rich finally pay their fair share in taxes.
This case was a Trojan Horse aimed at popular recent proposals to tax the very richest, which are among the most powerful tools we have to address eye-watering levels of inequality in the US. By issuing a narrow ruling upholding the tax at issue, the majority properly rejected a shameless attempt to shield the wealth of the super-rich, subvert democratic processes, and tie the hands of future policymakers.
Congress has the power to enact meaningful changes to our tax code that can help put an end to this second Gilded Age. The ruling is a call to all of us to organize and make our voices heard.”
Oxfam is a global organization that fights inequality to end poverty and injustice.
NTUF (National Taxpayers Union Foundation)
“This is a narrow decision focused on the one-time international tax that was challenged. But the Court makes clear it is not opening the door to a wealth tax, which would still face constitutional problems as a tax on property,” said Joe Bishop-Henchman, vice president on the National Taxpayers Union.
The NTUF provides research and analysis showing Americans how taxes, government spending, and regulations affect them. The NTUF filed an amicus brief in Moore, arguing that the lower court’s ruling was unconstitutional in its broad approach to collecting taxes.
Roosevelt Institute
Niko Lusiani, Director of the Corporate Power program at the Roosevelt Institute, said in a statement:
“Americans can take a sigh of relief that the Supreme Court in Moore chose not to run roughshod over the Constitution in deciding tax policy by ‘judicial say-so,’ as Franklin D. Roosevelt once put it. But the fact that the Court took the case raises the real possibility that judicial supremacy over tax policy could be exerted in the future. Tax policy by Supreme Court fiat would only serve to advance a vision of America that is unreflective of and unprepared for the economy of the 21st century.
Democracy and the Constitution require that the American people—through their duly elected representatives—determine the future of tax policy, even if that means changing the current structure and rules governing the Supreme Court to restore a semblance of balance of power.”
The Roosevelt Institute is a think tank, a student network, and the nonprofit partner to the Franklin D. Roosevelt Presidential Library and Museum.
NWLC (National Women’s Law Center)
Amy Royce, Senior Counsel for Income Security at the National Women’s Law Center (NWLC):
“The Court affirmed that billionaires and wealthy corporations don’t get to skirt laws requiring them to pay taxes on their income. It is Congress’ responsibility to levy taxes – not the courts’. The Supreme Court should continue to reject baseless claims that undermine Congress’ taxing authority.
With this authority reaffirmed, Congress must get to work to ensure that the wealthiest and big corporations finally pay their fair share. That starts with allowing the 2017 tax cuts for the rich to expire next year, as well as enacting other policies that give us a fairer tax code that supports investments in our care infrastructure.”
The National Women’s Law Center fights for gender justice — in the courts, in public policy, and in our society — working across the issues that are central to the lives of women and girls.
KPMG
Danielle Rolfes, partner in charge, Washington National Tax, KPMG LLP, said in a statement:
“The Supreme Court’s decision in Moore v. US resolves, at least for now, one of the unknowns as we move into 2025. Still, many more uncertainties lie ahead, including Pillars One and Two of the OECD’s BEPS 2.0 project, the expiration of many TCJA provisions, and further expected domestic law changes in 2025. While the Moore case did not deliver a taxpayer victory on the contentious issue of taxing unrealized gains, the Court does provide much needed clarity on the taxation of foreign subsidiaries of US companies.”
EY
David Herzig, EY Americas Private Tax Partner, said in a statement:
“The narrow decision of the Supreme Court in Moore vs. US preserves the current tax law including Section 965 of the Code, the Mandatory Repatriation Tax. Because the Court upheld the statute in a narrow way, our advice and compliance for shareholders in certain specified foreign corporations will remain unchanged. We look forward to providing more detailed analysis in the near future.”
BakerHostetler
Jeffrey Paravano, Chair of BakerHostetler’s Tax Group and DC Office Managing Partner, said:
“Although the five-justice majority determined that it need not resolve the issue of realization in Moore, it also specifically noted that the Supreme Court in Macomber ‘stated that income requires realization.’ Further, Justice Barrett’s concurrence in the judgment, joined by Justice Alito, states that: ‘(r)ealization may take many forms, but our precedent uniformly holds that it is required before the Government may tax financial gain without apportionment,’ and Justice Thomas’s dissent, joined by Justice Gorsuch, states that ‘Sixteenth Amendment “incomes” include only income realized by the taxpayer.’ Thus, the majority opinion recognizes that prior Supreme Court precedent requires realization, and four Justices in Moore recognize that realization is a requirement for federal taxation of income without apportionment. The opinion also notes that nothing in the opinion should be read to suggest that Congress could tax both an entity and its owners on the same income, and that the Due Process Clause “proscribes arbitrary attribution” — which gives tax practitioners food for thought on whether any current taxes might violate that holding.”
Grossman, co-leader of BakerHostetler’s Appellate and Major Motions team who argued the case before the Supreme Court, added:
“Divorcing income from realization seems to me to be off the table when you read the opinion in its entirety. The court’s opinion is best read to preserve the status quo and disapprove new kinds of income-taxation, such as taxes on wealth, on appreciation of assets, or on ordinary share investments.”
A team of BakerHostetler attorneys, led by partners Andrew Grossman and Jeffrey Paravano, represented the Moores at the United States Supreme Court.
Competitive Enterprise Institute (CEI)
Statement from Dan Greenberg, CEI general counsel:
“We are disappointed by the ruling today. This decision lets the government levy income taxes on foreign shareholders who have never received income. We think that is unfair, because the Constitution authorizes Congress to tax people on their income, not the income of foreign businesses that they do not control.
“However, as the Court noted, its decision has an extremely narrow scope. It is limited to taxation of shareholders of an entity on the undistributed income realized by that entity which has been attributed to the shareholders, and only when the entity has not also been taxed on that income. In other words, as the Court said, ‘our holding applies when Congress treats the entity as a pass-through.’ What this means is that the constitutionality of other species of future taxes – such as a national wealth tax – remains entirely unaddressed by the Court’s opinion.
“Because of the Moores’ decision to appeal the case to the highest court, the Supreme Court declined to affirm the Ninth Circuit’s claim that ‘realization of income is not a constitutional requirement.’ We believe that requiring the realization of income in order to levy an income tax is critical. That requirement ensures that people are taxed on their income, not their property. Any incursion on this long-understood limit on the federal taxing power would undermine the Constitutionally protected rights of the American people.
“Notably, two Justices (Barrett and Alito) affirmed the realization requirement for the constitutionality of an income tax in concurrence, while another two Justices (Thomas and Gorsuch) affirmed the same requirement in dissent. In contrast, there was only one Justice (Jackson, in a solo concurrence) who provided significant criticism of the realization requirement. If there is a challenge to a future income tax in which the Court must deal with the realization requirement squarely, it appears that the challengers are likely to receive a friendly audience from a substantial portion of the Court.”
Statement from Kent Lassman, CEI President and CEO:
“We are grateful to the Moores for carrying the burdens of litigation. We realize the advance of liberty for all is not linear and requires patriots to show courage in the face of government overreach. And we are thankful for the sound reasoning and high principle of the attorneys who argued the Moores’ case, especially lead attorney and BakerHostetler partner Andrew Grossman.”
Founded in 1984, the Competitive Enterprise Institute is an advocate of regulatory reform on a wide range of policy issues.
(The list will be updated as additional statements are released.)
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