The U.S. Supreme Court is currently hearing a significant tax case that could potentially have far-reaching implications for the federal tax code and the concept of taxing unrealized gains. The case, known as Moore v. U.S., involves a retired couple from Washington, Charles and Kathleen Moore, who are challenging a provision in the 2017 corporate tax cut enacted during President Trump's administration.
The Moores are contesting a tax on an investment they made in a foreign company, arguing that they are being unconstitutionally taxed on unrealized income from their foreign investment. They contend that they never received a profit from their investment and therefore should not be taxed on it. The couple further argues that the tax on unrealized gains is not allowed under the U.S. Constitution's 16th Amendment.
The case has drawn attention not only for its potential impact on the tax code but also due to calls for Justice Alito's recusal. Critics have pointed to Justice Alito's ties with one of the lawyers involved in the case, but Alito has rejected these claims and chosen to participate in the case.
Tax experts have warned that if the court rules in favor of the Moores, it could lead to chaos and years of tax litigation. It could also have implications for imposing a wealth tax on the rich and could impact other tax provisions and proposals for taxing the wealthiest Americans.
However, the Moores' case has been called into question due to discrepancies in the factual record, raising concerns about the accuracy of information presented to the Supreme Court. The outcome of the case remains to be seen, but its potential impact on the tax code and wealth tax plans is undeniable.