Supreme Court Can Guide Congress in Foreign Earnings Tax Case

September 6, 2023Article
Bloomberg Tax

Private Client Services Partner, Thomas Giordano-Lascari, published the article, "Supreme Court Can Guide Congress in Foreign Earnings Tax Case" to Bloomberg Tax.


In the tax world, the Supreme Court’s decision to hear arguments in Moore v. United States is a big deal because it challenges the constitutionality of a tax on foreign earnings known as a mandatory repatriation tax, or MRT, under Section 965 of the tax code.

The plaintiffs argue that the MRT is a direct tax on property and must be apportioned. Specifically, they say the MRT isn’t a tax on “income,” as interpreted under the Sixteenth Amendment. The essence of this argument is that the plaintiffs, as shareholders of a controlled foreign corporation, haven’t “realized” any income but instead are being taxed on the value of their shares as measured by that corporation’s retained earnings—a direct tax on property.

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