Taxes were already a big issue in the November elections. The Supreme Court just made them an even bigger one.

Taxes were already a big issue in the November elections. The Supreme Court just made them an even bigger one.

“If you favor the wealth tax, I think it’s very possible that this composition of the court will never work for you,” said Alan Cole, an economist at the Tax Foundation. – Photo by SAUL LOEB/AFP via Getty Images

The Supreme Court decision on the taxation of offshore income This could have been an indirect, albeit significant, measure in the fight against the wealth tax – but it did not happen that way.

The justices decided Thursday not to address the legality of taxing a household’s paper earnings, emphasizing that their 7-2 ruling was narrow and limited only to provisions of the 2017 tax cuts at issue.

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Supporters and critics of a wealth tax described the move as a resounding victory on their side.

“The fight continues to tax the rich, pass a wealth tax on ultra-millionaires and billionaires, and make the system fairer,” said Sen. Elizabeth Warren, a progressive Democrat from Massachusetts who has championed her own proposals in wealth tax matters. said in a post on Thursday.

This decision “is excellent news. Next year, there’s nothing stopping Congress from making the rich pay,” said Lindsay Owens, executive director of Groundwork Collaborative, a progressive advocacy group.

On the other hand, a future case dealing with what counts as taxable income could “receive a friendly hearing from a substantial portion of the Court.” And Greenberg said in a statement. Greenberg is general counsel for the libertarian Competitive Enterprise Institute and one of the attorneys for Washington couple sued over tax bill in Moore v. United States, the case has just been decided by the Supreme Court.

So the fate of proposals to raise taxes on ultra-rich Americans may have to await the results of November’s congressional and presidential elections, observers say.

With much of the 2017 tax cuts, passed under the Trump administration, expiring at the end of 2025, the tax stakes are already high in the upcoming election.

Which party controls the White House and Congress will determine what happens next in the tax code. Among others, five of seven income tax rates are about to return to higher rates. This includes the maximum rate of 37%, which would rise to 39.6%.

The Biden administration has a proposal it calls a billionaire minimum income tax, which would be a 25% tax on households worth at least $100 million and would take into account unrealized capital gains in his calculations.

In court papers, the Washington couple who unsuccessfully sued the government said the Supreme Court must preemptively stifle proposals like those from the Biden administration.

As tax negotiations loom after the election, unanswered questions related to Thursday’s decision leave “more options on the menu,” said John Stanford, managing director of Prism Group, a Washington public affairs firm. , DC which advises businesses, nonprofits and others. organizations.

“We just don’t have a lot of ways to raise revenue on the table to allow either side to achieve their goals,” he said. “Maybe that makes it appealing, and if you could explain it and convince him – that it only impacts a few Americans – it could be politically popular.”

Still, any form of wealth tax “still has a long way to go, even within the Democratic Party,” Stanford said.

If President Joe Biden defeats former President Donald Trump and Democrats control Congress, there’s a “non-negligible” chance that the very wealthy could face higher taxes, and even taxes on their wealth instead of their income, said Howard Gleckman, a senior researcher at the nonpartisan organization. Tax Policy Center.

But such a project would still have to go before the Supreme Court, he added. And for wealth tax supporters, he added, “if I were them, I wouldn’t take much comfort from this.”

The Biden campaign did not immediately respond to a request for comment.

The Trump campaign said Trump would deliver more tax cuts. “When President Trump returns to the White House, he will advocate for more tax cuts for all Americans and reinvigorate America’s energy industry to lower inflation, lower the cost of living and repay our debt,” campaign spokeswoman Karoline Leavitt said.

“Nothing in this review”

Charles and Kathleen Moore disputed a $14,729 tax bill related to their stake in a business focused on rural farmers in India.

The Moores never made a dime on their investment, dissenting Justice Clarence Thomas said. However, the company made the investment and the tax code properly allocated the profits to the couple, the majority said.

The majority decision was careful to emphasize that it stuck to the facts of a dispute over the mandatory repatriation tax, which targeted the profits of foreign subsidiaries of U.S. parent companies.

“Nothing in this opinion should be construed as authorizing a hypothetical effort by Congress to tax both an entity and its shareholders or associates on the same undistributed income earned by the entity,” Justice Brett Kavanaugh wrote in the majority opinion.

The majority did not address the all-important question of whether gains must be converted into real income before taxes can take effect.

Yet there is a majority opinion, two different consensuses, and hidden dissent in the decision. By analyzing Moore v. In the United States, some observers say many judges expect revenue to be realized before taxes take effect.

That wouldn’t bode well for something like Biden’s proposed minimum income tax on billionaires, said Alan Cole, senior economist at the nonpartisan Tax Foundation.

Justice Amy Coney Barrett sided with the majority, but wrote a concurring opinion with Justice Samuel Alito that was “as thin an agreement as possible,” Cole said.

Following Barrett and Alito, as well as Thomas and fellow dissenter Justice Neil Gorsuch, Cole said it would only take one more vote to say revenue must be earned before taxes apply.

“If you favor the wealth tax, I think it’s very possible that this makeup of the court will never work for you,” Cole said.

Of course, the composition of the Supreme Court itself also depends on elections.

The next president will have the chance to choose at least two new Supreme Court nominees, Biden would have said at a recent fundraiser in Los Angeles.

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