The United States Supreme Court failed to realize the worst fears of its progressive critics on Thursday by issuing a decision affecting Congress’s taxing power. By 7 votes to 2, the highest American court upheld the constitutionality of an important provision of the 2017 tax cut law signed into law by Donald Trump. This provision requires U.S. shareholders who own 10% or more of foreign corporations primarily owned or controlled by Americans to pay a one-time tax. Previously, they only owed taxes on profits brought back to the United States.
The provision seems pointed, but it could have had major consequences if found unconstitutional, experts say. The latter argued that a third of the tax code was threatened by the approach taken by a couple – Charles and Kathleen Moore – who had to pay the taxman nearly $15,000 in 2018 on gains of more than $500,000 made through an investment in a company based in India.
Progressive economists and politicians were particularly concerned that invalidating this provision would end their efforts to introduce a wealth tax in the United States. Because this invalidation would have been accompanied by a new definition of what “income” is and, therefore, what is taxable. That said, the author of the decision, Brett Kavanaugh, made a point of emphasizing in a footnote that his opinion did not represent support for a wealth tax. But the fact remains that the Supreme Court has not closed the door to such a thing.
Only Justices Clarence Thomas and Neil Gorsuch declined to join the majority.
And we are still awaiting the Supreme Court’s decision on the question of criminal immunity claimed by Donald Trump. Further decisions will be made on Friday.
PS: We are well into the penultimate day of the second fundraising campaign for this blog in 2024. As the thermometer indicated this Thursday morning, the target objective is achievable as long as the pace of the first three days don’t waver. I therefore ask all those who regularly visit this blog in this critical period of American political life to contribute to its maintenance, if they have not already done so. And thank you wholeheartedly to those who have already done it!
(Reuters photo)
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