At Bench Memos, Ed Whelan: On [Thursday's] Tax Ruling in Moore v. United States. From the introduction:
The big-picture takeaway for the general reader is that the five-justice majority—opinion by Kavanaugh, joined by the Chief, Sotomayor, Kagan, and Jackson—avoided deciding whether the Sixteenth Amendment requires that income be realized in order to be taxable. The four other justices—Thomas, Alito, Gorsuch, and Barrett—found it clear that the Sixteenth Amendment does impose a realization requirement.
While the majority opinion thus leaves open the theoretical possibility that the Sixteenth Amendment would allow a tax on wealth, it certainly does not greenlight such a tax. On the contrary, Justice Kavanaugh cites the government’s double acknowledgments at oral argument that a tax on wealth “might be considered a tax on property, not income” (and thus be subject to the Constitution’s onerous requirement that “direct” taxes be apportioned among the states according to population) and that the Sixteenth Amendment might require that income be realized.
And from later on:
Justice Barrett, joined by Justice Alito, concurred in the judgment, and Justice Thomas, joined by Justice Gorsuch dissented. Despite her agreement with the majority’s bottom line, Barrett’s opinion has much more in common with Thomas’s.
Addressing the question on which the Court granted certiorari (but that the majority does not decide), Barrett concludes that it is “straightforward” that the Sixteenth Amendment does not authorize Congress to tax unrealized sums. She disagrees with the majority’s reasons for saying that the income realized by a foreign corporation can be attributed to its taxpayers, but she finds that the plaintiff taxpayers in this case, having “barely addressed” the attribution question, “have not met their burden” of showing that the income at issue here cannot be attributed to them.
Justice Thomas, in his dissent, opines that realization is a constitutional requirement for income taxes, and he calls the majority’s “clear rule” on attribution an “invention” and a “mirage.” He concludes that the MRT does not operate as a tax on income.
This all sounds right to me, confirming that the opinion is generally consistent with an originalist perspective even though Justices Thomas and Gorsuch dissented. The majority opinion is appropriately narrow, unlike the Ninth Circuit opinion below, which (as Judge Bumatay argued in dissent) went far beyond an originalist interpretation of the Sixteenth Amendment.
RELATED: For a more pessimistic view, from the editors of the Wall Street Journal: A Supreme Court Mistake on Wealth Taxes – Five Justices open the door to taxing unrealized gains in assets. Democrats will walk through it.
Posted at 6:06 AM