Washington — The Supreme Court appeared inclined to leave in place an obscure tax provision enacted during the Trump administration during oral arguments on Tuesday, with several of the justices expressing concerns with the repercussions of a broad decision in the closely watched case.
The dispute before the justices, known as Moore v. U.S., involves the “mandatory repatriation tax,” a one-time tax targeting U.S. taxpayers who held shares of certain foreign corporations. Charles and Kathleen Moore, who invested in a company based in India more than 15 years ago, brought the case, arguing that the tax is impermissible under the 16th Amendment because it taxes unrealized gains.
During more than two hours of arguments, the justices peppered lawyers for both sides with questions about the implications of their positions and appeared aware of how a sweeping ruling would reverberate across the U.S. tax system and put existing tax laws at risk.
Solicitor General Elizabeth Prelogar, who represents the U.S before the high court, warned the justices that invalidating the mandatory repatriation tax would “cause a sea change in the operation of the tax code and cost several trillion dollars in lost tax revenue.” But Andrew Grossman, who argued on behalf of the Moores, told the court that allowing a tax on income that a taxpayer has not yet received “sweeps away what the framers regarded as the essential check on Congress’ power to tax property.”