Billionaire Tax Rests on Disputed $14,729 Refund

One of the Moores’ lawyers, David Rivkin of Baker & Hostetler, sparked another controversy when he co-wrote two article that described conservative Justice Samuel Alito in favorable terms.

The articles, which appeared in the Wall Street Journal’s opinion section, gave Alito a forum to discuss calls for stronger ethics rules and the leak of the court’s abortion 2022 opinion.

Alito then rejected Democratic demands that he recuse from the Moore case, saying in an unusual statement that “there was nothing out of the ordinary about the interviews in question.”

The Moore case drew relatively scant attention when the court granted review last June, just as it was releasing a flurry of opinions at the end of its 2022-23 term. Outside groups and individuals have since filed more than 40 friend-of-the-court briefs underscoring the potential impact.

Tax ‘Chaos’

A victory for the Moores could cause “chaos” across the federal tax code and invite litigation over a swath of provisions enacted over decades, said Chye-Ching Huang, executive director of the Tax Law Center at New York University’s law school. She said the Moores and their allies are using the prospect of a wealth tax as a “diversion” in the case.

“What they don’t want the court to be focusing on is the very real damage their theory could have on the existing tax regime,” Huang said.

The Biden administration says the court can uphold the mandatory repatriation tax without making any judgment on a hypothetical wealth tax. Quoting from a 1943 Supreme Court case, U.S. Solicitor General Elizabeth Prelogar said the court traditionally “does not decide whether a tax may constitutionally be laid until it finds that Congress has laid it.”

Prelogar, the administration’s top Supreme Court lawyer, said a wealth tax, which would be levied on assets at a particular point in time, would be “fundamentally distinct” from an income tax, which targets economic gains over a period of time. She contends undistributed corporate earnings constitute income under the Sixteenth Amendment.

The Sixteenth Amendment authorizes Congress “to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States.”

Biden rejected an outright wealth tax as advocated by Warren during the 2020 campaign but has since embraced a scaled-back version.

His most recent budget would require taxpayers worth more than $100 million to pay a minimum of 25% on their capital gains each year, whether they sold assets for a profit or continue to hold them. Biden touted it at this year’s State of the Union Address as a “billionaire minimum tax.”

The case, which the court will decide by late June, is Moore v. United States, 22-800.

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