The Supreme Court majority once again sided with the Government, violating their oath to support the Constitution. As explained by Justice Bradley (1886), “It is the duty of courts to be watchful for the constitutional rights of the citizens, and against any stealthy encroachments [by Congress and Government].” Justice Kavanaugh, writing for the majority, readily admitted:
“And those tax provisions, if suddenly eliminated, would deprive the U.S. Government and the American people of trillions in lost tax revenue. The logical implications of the Moore’s theory would therefore require 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.”
Kavanaugh and the majority were not worried about the constitutional rights of the Moore’s. But they were absolutely concerned about protecting the tax revenues of the U.S. Government! As such, they violated their oath to support the U.S. Constitution.
Justice Thomas, with whom Justice Gorsuch joins, dissenting, wrote:
“Charles and Kathleen Moore paid $14,729 in taxes on an investment that never yielded them a penny. They challenge that tax—the Mandatory Repatriation Tax (MRT)—as unconstitutional. As relevant, they argue that a tax on unrealized investment gains is not a tax on ‘incomes’ within the meaning of the Sixteenth Amendment, and it therefore cannot be imposed ‘without apportionment among the several States.’
“The Moore’s are correct. Sixteenth Amendment ‘incomes’ include only income realized by the taxpayer.”
“We granted certiorari to answer the question ‘whether the Sixteenth Amendment authorizes Congress to tax unrealized sums without apportionment among the states,’ i.e., as ‘incomes.’ Today, the Court upholds the MRT only by ignoring the question presented.”
“After changing the subject, the majority upholds the MRT by relying on unrelated precedent. . .”
“I respectfully dissent. The Ninth Circuit erred by concluding that realization is not a constitutional requirement for income taxes. And, the majority’s ‘attribution’ doctrine is an unsupported invention.”
Justice Thomas addresses each case the majority cited, showing how they conveniently plucked “superficially supportive phrases from an eclectic selection of tax cases. . . none of the cases supports the proposition that the Sixteenth Amendment empowers Congress to freely attribute income to any taxpayer it reasonably chooses.”
Justice Thomas concluded,
“The majority is not ashamed to lay bare the consequentialist heart of its opinion. Because it wrongly concludes that the Moore’s constitutional argument would invalidate not only the MRT but also other longstanding taxes, the majority frets that the Moore’s would ‘deprive the U.S. Government and the American people of trillions in lost tax revenue’ and ‘require Congress to either drastically cut critical national programs or significantly increase [other] taxes.’ ‘The Constitution does not require that fiscal calamity,’ the majority claims. I agree. But, if Congress invites calamity by building the tax base on constitutional quicksand, ‘the judicial Power’ afforded to this Court does not include the power to fashion an emergency escape.”
“The majority acknowledges that the Sixteenth Amendment draws a distinction between income and its source. And, it does not dispute that realization is what distinguishes income from property. Those premises are sufficient to establish that realization is a constitutional requirement. Sixteenth Amendment ‘income’ is only realized income. We should not have hesitated to say so in this case. I respectfully dissent.”
Justice Barrett, joined by Justice Alito, concurred in the majority judgment. But they had the same reservations as Justices Thomas and Gorsuch, e.g., “The Government is unable to cite a single decision upholding an unapportioned tax on appreciation. That is no surprise, because our precedent forecloses the Government’s argument.” However, because the Moore’s conceded that Subpart F, which was likened to the MRT, was constitutional, Barrett and Alito believe that the Moore’s did not “bear the burden to show they are entitled to a refund.” For that reason alone, they joined the majority judgment.
Then you have Justice Jackson—who cannot define a woman because she is “not a biologist”—who incorrectly states that the term “incomes” is flexible enough to include realized and unrealized gains. In her opinion, Congress has unlimited powers to tax anything and everything. Furthermore, Jackson’s solution for abusive taxation is to be found at the ballot-box.
Thomas Jefferson warned us about this. “To consider the judges as the ultimate arbiters of all constitutional questions [is] a very dangerous doctrine indeed, and one which would place us under the despotism of an oligarchy. Our judges are as honest as other men, and not more so. They have, with others, the same passions for party, for power, and the privileges of their corps.” Let’s Take Politics Out of the Supreme Court and Restore Freedom (Amazon.com)!
Dum Spiro Spero—While I breathe, I hope.
Slàinte mhath,
Robert (Mike) G. Beard Jr., C.P.A., C.G.M.A., J.D., LL.M.