The Supreme Court is hearing a case Tuesday that could upend current tax law and make future tax hikes on rich people unconstitutional, while also potentially costing the treasury hundreds of billions of dollars in the next decade. The cherry on top is that Justice Samuel Alito will be hearing—and involved in deciding—this case despite a clear conflict of interest in it. So much for that ethics code!
The case, Moore v. United States, is a direct challenge to the federal government’s power to tax, and could result in a potentially far-reaching challenge to the nation’s tax code. It challenges a one-time tax imposed by the 2017 Trump tax scam on corporate earnings that had accumulated overseas. It was brought by a Washington state couple seeking a $14,729 refund for taxes paid on their investments in a company based in India, a provision included in the law to offset some of the huge tax cuts it gave to wealthy individuals and corporations. Under this provision, some investors “must pay a percentage of the money that the corporation has kept overseas, even though the investor has not sold their stock or received any of that money as a dividend.”
The onetime tax, which investors can pay out over eight years, is expected to raise $340 billion by 2027. That’s the first budget-busting potential problem if the Supreme Court finds the law unconstitutional. Another problem is that a broad ruling could open up tax law on partnerships, multinational companies, and bond investors for litigation. Even former House Speaker Paul Ryan, the guy who helped pass the 2017 GOP tax scam, has warned that as much as a third of the tax code could be upended if the court rules broadly for the plaintiffs.
