Corporate Accountability

RELEASE: Supreme Court Oral Argument Shows Conservative Attempt to Limit Congress’s Taxing Power is Misguided

WASHINGTON, DC – Following oral argument at the Supreme Court this morning in Moore v. United States, a case in which the Court is considering a lawsuit that could limit Congress’s power to tax income under the Sixteenth Amendment, Constitutional Accountability Center Senior Appellate Counsel Brian Frazelle issued the following reaction:

Although this case involves an obscure, one-time tax passed by a Republican Congress and signed by President Trump, its proponents have billed the case as a vehicle for the Court’s conservative supermajority to preemptively restrict future Congresses from enacting a wealth tax or other innovative revenue measures. Today’s oral argument confirmed how misguided that effort was.

The challengers to the tax measure, who want to avoid paying income tax on the profit earned by a foreign corporation they partially own, claim that income may not be taxed until it is “realized” (essentially, received or otherwise directly made use of) by the taxpayer. As the oral argument made clear, however, this case can be resolved without even addressing that question, based on Congress’s longstanding authority to attribute the income of a corporation to its owners.

If the Court does address the question whether income realization is a constitutional requirement, the answer should be clear. Long before the ratification of the Sixteenth Amendment—which restored Congress’s power to tax income in response to an activist and ahistorical Supreme Court decision—Congress repeatedly taxed unrealized gains as income, and the Amendment’s ratifiers understood that the authority to levy such taxes was part of the power they were restoring to Congress.

Our amicus brief for law professors John R. Brooks and David Gamage traced this history, and the challengers had no persuasive response to it at oral argument, even when pressed by Justice Sotomayor on the matter. Solicitor General Elizabeth Prelogar had it right when she explained that the Sixteenth Amendment was meant to restore a preexisting constitutional power, and that the right way to understand the scope of that power is to look at how it was exercised before the Amendment.

##

Resources:

Case page in Moore v. United States: https://www.theusconstitution.org/litigation/moore-v-united-states/

##

Constitutional Accountability Center is a nonpartisan think tank and public interest law firm dedicated to fulfilling the progressive promise of the Constitution’s text, history, and values. Visit CAC’s website at www.theusconstitution.org.

##

 

More from Corporate Accountability

Corporate Accountability
U.S. Court of Appeals for the Fifth Circuit

National Association of Private Fund Managers v. Securities and Exchange Commission

In National Association of Private Fund Managers v. Securities and Exchange Commission, the Fifth Circuit is determining whether Congress granted the SEC the authority to regulate private fund advisers.
Corporate Accountability
U.S. Supreme Court

Cantero v. Bank of America

In Cantero v. Bank of America, the Supreme Court is considering whether a state law protecting New York homeowners is preempted by the federal National Banking Act.
Corporate Accountability
U.S. Supreme Court

Moore v. United States

In Moore v. United States, the Supreme Court is considering a challenge to Congress’s power to tax income under the Sixteenth Amendment.
Corporate Accountability
U.S. District Court for the District of New Jersey

Bristol Myers Squibb v. Becerra and Janssen v. Becerra

In Bristol Myers Squibb v. Becerra and Janssen v. Becerra, the District of New Jersey is considering whether the Inflation Reduction Act’s Medicare drug price negotiation program amounts to an unconstitutional taking of their property.
Corporate Accountability
September 28, 2023

Lopsided Success for Corporate Interests: The New Normal Under the Supreme Court’s Conservative Supermajority (2022-2023 Term)

Every year, the Supreme Court moves the needle further and further in favor of industry.
By: Brian R. Frazelle
Corporate Accountability
June 30, 2023

RELEASE: Chamber of Commerce Has Another Remarkably Successful Term Advancing Its Positions Before the Supreme Court, Constitutional Accountability Center Finds

WASHINGTON, DC – The 2022-2023 Supreme Court Term has just concluded, and the U.S. Chamber...
By: Brian R. Frazelle