By Katelynn Richardson
The Supreme Court announced Monday it would take up a case considering whether Congress can tax income before it is received.
The case, Charles G. Moore et ux. v. United States, stems from a Washington state couple’s 2019 lawsuit against the government for a nearly $15,000 tax bill imposed on their small investment in an overseas company, from which they never earned a profit. It considers whether taxes on unrealized gains are legal under the 16th Amendment, which enables Congress to tax incomes “without apportionment among the several States.”
Hank Adler, Burra Executive Professor of Accounting at Chapman University, previously told the Daily Caller News Foundation the Moores’ case is “the most important tax case in almost 100 years.”
Kathleen and Charles Moore are asking for a refund on the $14,729 tax bill they received after Congress passed the 2017 Tax Cuts and Jobs Act, which included a one-time tax on shareholders with a 10% stake in foreign companies that earned profits regardless of whether or not those profits were received.
The Ninth Circuit upheld the tax, which dissenting judges said made it “the first court in the country to state that an ‘income tax’ doesn’t require that a ‘taxpayer has realized income.’”
“The Supreme Court’s decision to hear Moore v. US is very good news for Americans,” Dan Greenberg, General Counsel at the Competitive Enterprise Institute, an organization representing the Moores, said in a statement provided to the DCNF. “A century of precedent shows that – in order to be taxed – income requires realization: this means that income taxes can only be levied on realized income. We hope that, when the Supreme Court considers Moore, it insists that its own precedents on this issue must be followed.”
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