If you’re anything like me, and you have my deepest sympathies if you are, every time you get a notification that refers to the Supreme Court these days, your spleen turns to ice. On Thursday, the court cleared the decks somewhat, announcing decisions in three cases, the most significant of which would seem to be its 7–2 decision in the case of Moore v. U.S., which upheld a Trump-administration rule that levied a one-time tax on earnings derived by Americans who invested in foreign corporations. The majority, in a decision delivered by Justice Brett Kavanaugh, ruled that the tax provision was constitutional. But more than that, it may have ensured the continued survival of the United States tax code as we know it. From The Washington Post:
Writing for the majority, Justice Brett M. Kavanaugh said the challenge to the tax on offshore earnings could have rendered “vast swaths of the Internal Revenue Code unconstitutional....Those tax provisions, if suddenly eliminated, would deprive the U.S. Government and the American people of trillions in lost tax revenue,” he wrote. The implications of the challengers’ argument, he added, would have required Congress to “either drastically cut critical national programs or significantly increase taxes on the remaining sources available to it—including, of course, on ordinary Americans. The Constitution does not require that fiscal calamity.”
Well, look at the big brain on Brett.
From the moment the court took this case, people looked at it as a stalking horse for an eventual case that would bury forever the possibility of an Elizabeth Warren–style “wealth tax.” Kavanaugh’s opinion specifically stated that this decision did not resolve the constitutionality of a wealth tax. All it did was temporarily allow for the possibility of one.
Mark David Stern, writing in Slate, points out that the case brought by the Moores was rather bogus both in its origins and in its arguments (which would lend credence to the stalking-horse theory). Stern further explains that at least some faction of the court is getting fed up with having to rule on fact-free cases brought for shabby ideological reasons.
The plaintiffs made up the facts of this case, stretching the truth far past its breaking point. University of Florida Law professor Mindy Herzfeld’s invaluable reporting at Tax Notes, verified by the Washington Post, points to numerous “mistakes and misstatements” in Grossman and Rivkin’s narrative. Charles Moore claims to have invested $40,000 in KisanKraft in a single transaction—but he actually invested $150,000 in three transactions over seven years. He also advanced the company $250,000 for a year, drawing 12 percent interest. Perhaps most egregiously, he served as director of the company for five years, repeatedly traveling to India and receiving at least $14,000 in reimbursements. Moore’s lawyers framed him as a passive investor who had little direct involvement with KisanKraft and merely wished to help it succeed through a relatively small investment. In reality, he was closely and continually involved, making his undistributed income exactly the kind of gains that Congress had traditionally taxed.
Is there a conscience a’borning here? An attempt to recapture the dignity that some of the court members sold off wholesale in exchange for luxury fishing trips and tricked-out RV’s? I just wish I didn’t jump every time my phone buzzed.
Charles P Pierce is the author of four books, most recently Idiot America, and has been a working journalist since 1976.
