Supreme Court to hear case that could make it harder for Congress to tax the rich

The Supreme Court will hear oral arguments on Tuesday in a case that could both save the rich billions of dollars and hamper President Joe Biden and Democrat from imposing certain types of wealth taxes in the future.

The case, Moore vs the United States, could have sweeping ramifications for the existing tax code, potentially overturning multiple provisions that largely hit well-off Americans and costing the federal government hundreds of billions of dollars in revenue.

The case centers on a measure in the Tax Cuts and Jobs Act, which Republicans in Congress passed in 2017. It created a one-time transition tax levied on shareholders on undistributed profits accrued between 1986 and the end of 2017 by certain foreign corporations that are majority owned by Americans. The provision is expected to raise $340 billion over a decade.

Charles and Kathleen Moore, who were investors in an India-based company, were hit with a $15,000 tax bill because of the provision, though they say that the business reinvested its earnings and never distributed any amount to them.

The couple contends that the transition tax violates the 16th Amendment, which grants Congress the power to levy taxes on income, because they never received any of the company’s profits. Both a federal district court and the 9th US Circuit Court of Appeals rejected their arguments.

Several conservative organizations have filed amicus briefs that take a more sweeping view, claiming that the amendment generally requires income to be realized for it to be taxed. Also, some warn that the 9th Circuit’s decision could enable a federal taxation of wealth.

The Justice Department argues that the transition tax is constitutional, saying the 16^th Amendment does not restrict Congress to taxing only realized gains.

While the justices could limit their decision to the transition tax, any…