The Supreme Court issued a narrow 7-2 ruling on June 20 rejecting a sweeping constitutional argument that a wealthy Washington state couple brought before them that was viewed as a stalking horse aimed at preemptively striking down a future tax on wealth.
The couple, Charles and Kathy Moore, had challenged the constitutionality of the Mandatory Repatriation Tax, which was enacted as part of Republicans’ 2017 Tax Cuts and Jobs Act. The MRT imposed a one-time retroactive tax on Americans who received “undistributed” income — meaning income not distributed to them by a company — from foreign corporations in which they held more than a 10% stake. The Moores argued that the tax was unconstitutional because the 16th Amendment only authorizes taxes on income, and that the unrealized gains they received from undistributed income in foreign corporations is not income.
