Moore v United States (unrealized income is taxable on a pass through basis)

Politics
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The Supreme Court rules that the one time Mandatory Repatriation Tax was a tax on income, thus an indirect tax and thus not subject to apportionment. Because the underlying corporation realized gains, even though they never distributed the gains, the Moore’s were subject to paying tax on a pass through basis.

After further thought, I have reversed my viewpoint and accept the pass through taxation as legal, though I dislike it as it resulted in the unfortunate situation of the Moore’s who were taxed on money they never received and never will receive. Hopefully, the United States will never repeat the Mandatory Repatriation Tax or at least limit it to income actually realized.

However, my FUNDAMENTAL view point regarding direct vs indirect taxation has been 100% reinforced by the Supreme Court.

From the syllabus of the opinion:

(a) Article I of the Constitution affords Congress broad power to lay and collect taxes. That power includes direct taxes—those imposed on persons or property—and indirect taxes—those imposed on activities or transactions. Direct taxes must be apportioned among the States according to each State’s population, while indirect taxes are permitted without apportionment but must “be uniform throughout the United States,” §8, cl. 1. Taxes on income are indirect taxes, and the Sixteenth Amendment confirms that taxes on income need not be apportioned. Pp. 5–7.

Note that the Supreme Court states that the 16th Amendment CONFIRMS that taxes on income need not be apportioned. The 16th Amendment was necessary to rectify the Supreme Court’s gross error in Pollock. In reality, the original Constitutional text permitted income taxes without apportionment and the 16th Amendment should be viewed as explanatory of the original intent of the Constitutional taxation clause.

The Supreme Court today confirmed my recently expressed opinion regarding direct taxes.

A direct tax is a tax imposed directly on persons or property to include:

  1. Capitation
  2. Wealth
  3. Personal Property
  4. Real Property

I would also note that in upholding the MRT, the Supreme Court also closed the door to any future wealth tax without apportionment. And that, by far, is the most important thing to take away from today’s ruling.

And though the decision was 7 to 2 (Thomas and Gorsuch dissenting) all 9 Justices concurred regarding direct taxation.

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Do you think that this will be a precedent if the Biden Administration’s crackdown on Partnership Basis Shifting gets challenged?

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Probably not. This decision was deliberately very narrowly written to address the MFT and likely won’t be used as a precedent for domestic partnerships. The MFT was solely focused on foreign entities.

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Think of all the taxes democrats can now come up with to tax stockholders because a company they own stock in had income even if the stockholders got none of it! Eutopia is coming!

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It is more than just sickening that Justices KAVANAUGH, ROBERTS, SOTOMAYOR, KAGAN, JACKSON, BARRETT AND ALITO all refused to answer the fundamental question in Moore v. United States which was, what distinguishes a direct tax from one that is indirect as understood at the time our Constitution was framed and ratified by the States.

In writing the Court’s opinion, KAVANAUCH notes: “Congress has rarely enacted direct taxes because the Constitution requires that direct taxes be apportioned among the States. To be apportioned, direct taxes must be imposed “in Proportion to the Census of Enumeration.” U. S. Const., Art. I, §9, cl. 4; see also §2, cl. 3. In other words, direct taxes must be apportioned among the States according to each State’s population.

But instead of confronting and answering the question which has plagued our country almost from its beginning, see, Hylton v. United States, 3 Dall. 171, 175 (1796) the above mentioned Justices cowardly avoid answering the question and instead reference a host of previous court opinions, not one of which actually answers the question, but by innuendo and dicta, suggest a particular tax is indirect when historical documentation may prove otherwise.

On the other hand, Justice THOMAS in a dissenting opinion, in which Justice GORSUCH joined, accurately summarizes the seven other Justice’s outright negligence which indicates their concern is that validation of the Moores argument would deprive the U. S. Government and the American people of trillions in lost tax revenue, and not whether the Constitution is violated by the Tax.

Justice THOMAS writes:

“The majority is not ashamed to lay bare the consequentialist heart of its opinion. Because it wrongly concludes that the Moores’ constitutional argument would invalidate not only the MRT but also other longstanding taxes, the majority frets that the Moores would “deprive the U. S. Government and the American people of trillions in lost tax revenue” and “require Congress to either drastically cut critical national programs or significantly increase [other] taxes.” Ante, at 21. “The Constitution does not require that fiscal calamity,” the majority proclaims. Ibid. I agree. But, if Congress invites calamity by building the tax base on constitutional quicksand, “[t]he judicial Power” afforded to this Court does not include the power to fashion an emergency escape. “

“Even as the majority admits to reasoning from fiscal consequences, it apparently believes that a generous application of dicta will guard against unconstitutional taxes in the future.”

“Sensing that upholding the MRT cedes additional ground to Congress, the majority arms itself with dicta to tell Congress “no” in the future. But, if the Court is not willing to uphold limitations on the taxing power in expensive cases, cheap dicta will make no difference.”

In concluding Justice THOMAS correctly points out:

“The Court today upholds the MRT, but not because it endorses the Ninth Circuit’s erroneous view that “realization of income is not a constitutional requirement.” 36 F. 4th, at 936. The majority acknowledges that the Sixteenth Amendment draws a distinction between income and its source. Ante, at 7. And, it does not dispute that realization is what distinguishes income from property. Ante, at 8. Those premises are sufficient to establish that realization is a constitutional requirement. Sixteenth Amendment “income” is only realized income. We should not have hesitated to say so in this case. I respectfully dissent.”

JWK

What makes a Supreme Court opinion legitimate is when it is in harmony with the text of our Constitution and its documented legislative intent which gives context to its text.

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That was actually a Republican tax.

In any event, the decision was narrowly tailored and does not authorized any type of tax that does not already exist.

The Supreme Court did make the one important distinction and that was between direct and indirect taxes and essentially closed the door to any future wealth tax and that frankly is the most important thing to take away from this decision.

Allowing the Mandatory Repatriation Tax to survive is frankly trivial.

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Justice THOMAS in a dissenting opinion, in which Justice GORSUCH joined, writes:

“Even as the majority admits to reasoning from fiscal consequences, it apparently believes that a generous application of dicta will guard against unconstitutional taxes in the future.”

The majority’s opinion has not only ignored and willingly subjugated the very protection written into our Constitution to preclude against the type of tax in question, but it has also opened the door for our federal government to continue in its unrelenting gorging of America’s wealth and the destruction of its economic engine.

JWK

If, by calling a tax indirect when it is essentially direct, the rule of protection [apportionment] could be frittered away, one of the great landmarks defining the boundary between the nation and the states of which it is composed, would have disappeared, and with it one of the bulwarks of private rights and private property. POLLOCK v. FARMERS’ LOAN & TRUST CO., 157 U.S. 429 (1895) JUSTICE FULLER

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that is a completely ignorant statement. SCOTUS does not “authorize” taxes. This decision does allow a new model under existing law. Tax stockholders for money they don’t receive based on companies they own stock in having income. If they then sell the stock will they be able to credit the tax on the income they did not receive from the tax they will owe on the gain?

This decision is wrong. And as Thomas pointed out, it’s not based on the constitution, it is based on the consequence of deciding the case correctly. Unrealized income is not income at all. It’s the imaginary number.

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Not sure that this is a case of taxing unrealized income so much as to whom the realization is attributed.

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As Thomas and Gorsuch point out . . .

" . . . the majority’s “attribution” doctrine is an unsupported invention."

and . . .

“The “clear rule” that the majority relies on to sidestep the realization question is thus a mirage.”

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Another bull ■■■■ idea by the dems.

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Their infamous “wealth tax” is back on the table with this illegitimate ruling. This is the kind of ■■■■■■■■ rulings we get when the majority not only ignores the text of the Constitution, but also ignores the documented intentions and beliefs under which the Constitution was adopted, which gives context to its text.

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:roll_eyes:

The truth is the majority avoided documenting and clarifying the distinction between a direct tax from one which is indirect as the terms were understood during the time period when our constitution was framed and ratified.

The majority declared “Because income taxes are indirect taxes, they are permitted under Article I, §8 without apportionment.”

But the majority’s assertion that “. . . income taxes are indirect taxes . . . “ ___ or to express the same thought while being more in line with the wording of the Sixteenth Amendment ___ the assertion that “a tax on incomes is an indirect tax . . . “, is patently false because a tax on income can in fact take the form of a direct tax if we apply the characteristics which distinguish a direct tax from one which is indirect as our founders understood the terms during the time period when our Constitution was framed and ratified.

And since there has been no repeal of our Constitution’s command that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken”, and also states, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration” it is therefore essential if the court is to be obedient to our Constitution and its legislative intent, to give full force and effect to the protection afforded by apportionment when applicable, while at the same time distinguishing how a tax on incomes can be indirect and not requiring apportionment. That was the task at hand, and which the majority was intentionally negligent by avoiding.

So, as it turns out, you comment that the "Supreme Court today confirmed my recently expressed opinion regarding direct taxes ", is false.

JWK


The whole aim of construction, as applied to a provision of the Constitution, is to discover the meaning, to ascertain and give effect to the intent of its framers and the people who adopted it._____HOME BLDG. & LOAN ASSOCIATION v. BLAISDELL, 290 U.S. 398 (1934)

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I see Safiel has vanished from his own thread, and avoids defending the assertions he has made.

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An income tax is not paid by the income but by the person, from the first penny to the last.

The pretense that an entity pays it, if a person in paying it, is gross.

This is early in our republic, Justice Bushrod Washington in Corfield v Coryell.

Progressive taxation is abhorrent too.

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The bottom line is eight Justices [KAVANAUGH, ROBERTS, SOTOMAYOR, KAGAN, JACKSON, BARRETT AND ALITO] on our Supreme court lied and ignored their oath to support and defend the Constitution.

The Constitution states:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

The Moores never “derived” one thin dime in income. The property derived an increase in value.
The tax is therefore a direct tax on property and requires apportionment.

Justice THOMAS in his dissenting opinion, in which Justice GORSUCH joined, accurately summarizes the seven other Justice’s outright negligence which indicates their concern is that validation of the Moores argument would deprive the U. S. Government and the American people of trillions in lost tax revenue, and not whether the Constitution is violated by the Tax.

Justice THOMAS writes:

“The majority is not ashamed to lay bare the consequentialist heart of its opinion. Because it wrongly concludes that the Moores’ constitutional argument would invalidate not only the MRT but also other longstanding taxes, the majority frets that the Moores would “deprive the U. S. Government and the American people of trillions in lost tax revenue” and “require Congress to either drastically cut critical national programs or significantly increase [other] taxes.” Ante, at 21. “The Constitution does not require that fiscal calamity,” the majority proclaims. Ibid. I agree. But, if Congress invites calamity by building the tax base on constitutional quicksand, “[t]he judicial Power” afforded to this Court does not include the power to fashion an emergency escape. “

“Even as the majority admits to reasoning from fiscal consequences, it apparently believes that a generous application of dicta will guard against unconstitutional taxes in the future.”

“Sensing that upholding the MRT cedes additional ground to Congress, the majority arms itself with dicta to tell Congress “no” in the future. But, if the Court is not willing to uphold limitations on the taxing power in expensive cases, cheap dicta will make no difference.”

In concluding Justice THOMAS correctly points out:

“The Court today upholds the MRT, but not because it endorses the Ninth Circuit’s erroneous view that “realization of income is not a constitutional requirement.” 36 F. 4th, at 936. The majority acknowledges that the Sixteenth Amendment draws a distinction between income and its source. Ante, at 7. And, it does not dispute that realization is what distinguishes income from property. Ante, at 8. Those premises are sufficient to establish that realization is a constitutional requirement. Sixteenth Amendment “income” is only realized income. We should not have hesitated to say so in this case. I respectfully dissent.”

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Cutting “critical national programs” that there often is no enumerated power for, I might add.

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Especially “programs” giving top of the shelf amenities to illegal entrant foreign nationals.

KAVANAUGH, ROBERTS, SOTOMAYOR, KAGAN, JACKSON, BARRETT AND ALITO ought to be ashamed of themselves for being spinless, and caving into federal taxing powers being used in a manner specifically rejected during the framing and ratification of our Constitution.

JWK

Eight S.C. Justices lied. The Moores never “derived” one thin dime in income. The property derived an increase in value. The tax is therefore a direct tax on property and requires apportionment.

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The tax in Moore v United States can be levied, but requires apportionment

.

Safiel,I would like to give you one more opportunity to explain why the tax in Moore v. United States, is not a direct tax, and requires apportionment.

It appears irrefutable that the property derived an increase in value. The Moores did not receive one thin dime. Taxing the Moores on the increase in value derived by the property makes the tax direct and requires apportionment.

The Constitution states:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

“The Moores are correct. Sixteenth Amendment “incomes” include only income realized by the taxpayer. The text and history of the Amendment make clear that it requires a distinction between “income” and the “source” from which that income is “derived.” And, the only way to draw such a distinction is with a realization requirement. Our precedent says as much. In Eisner v. Macomber, 252 U. S. 189 (1920), the Court explained that “the characteristic and distinguishing attribute of income,” as the term is used in the Sixteenth Amendment, is that it is “received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal.” Id., at 207. Because the Moores never actually received any of their investment gains, those unrealized gains could not be taxed as “income” under the Sixteenth Amendment.” ___ Thomas dissenting

You still have not explained why the tax is not a direct tax and requires apportionment which is what was found in Eisner v. Macomber:

“Thus, from every point of view, we are brought irresistibly to the conclusion that neither under the Sixteenth Amendment nor otherwise has Congress power to tax without apportionment a true stock dividend made lawfully and in good faith, or the accumulated profits behind it, as income of the stockholder. The Revenue Act of 1916, insofar as it imposes a tax upon the stockholder because of such dividend, contravenes the provisions of Article I, § 2, cl. 3, and Article I, § 9, cl. 4, of the Constitution, and to this extent is invalid notwithstanding the Sixteenth Amendment”

It would be nice, Safiel if you came out of the witness protection program and explain your reasoning why the tax is not direct and requires and apportionment.

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The Libs favor the taxation of OTHER PEOPLE’S money whether it is constitutional or not.

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