WASHINGTON — The Supreme Court will hear a case Tuesday on a Washington couple's $15,000 tax bill, widely seen as a test for a never-enacted wealth tax.
A decision in favor of Charles and Kathleen Moore of Redmond, Washington could strike out a provision of the 2017 tax bill expected to raise $340 billion, jeopardize other provisions of the tax code and eliminate a wealth tax that favors by Some Democrats argue that the richest Americans are not paying their fair share of taxes.
Paul Ryan, the Wisconsin Republican who was speaker of the House of Representatives when the tax bill passed a Republican Congress and was signed into law by then-President Donald Trump, has called the challenge “misguided” and said that “a major part of the tax code would be unconstitutional if it were to prevail.”
The couple is supported by conservative political groups and business interests, including the U.S. Chamber of Commerce.
The law applies to companies owned by Americans but doing business abroad. It imposes a one-time tax on investors' profit shares that have not been passed on to them, to offset other tax benefits.
The Moores paid $15,000 in taxes based on Charles Moore's investment in an Indian company.
They claim the tax violates the 16th Amendment, which allows the federal government to impose an income tax on Americans. Moore said in an affidavit that he never received any money from the KisanKraft Machine Tools Private Limited company.
Some groups linked to the Moores argue that the challenged provision is akin to a wealth tax, which would apply not to the incomes of the very richest Americans, but to their assets, such as stock holdings, which are now taxed only when they are sold .
Democratic Sen. Ron Wyden of Oregon said a court ruling for the Moores could hamper legislation like the billionaires' income tax he introduced last week. “The Moore case could make it impossible to close these loopholes,” Wyden said.
The case has also raised ethical concerns and questions about the story the Moores' lawyers told in court filings. Public documents show that Charles Moore's involvement with the company, including five years as director, is much more extensive than court records indicate.
Senate Democrats had asked Judge Samuel Alito to step aside from the case over his interactions with David Rivkin, a lawyer representing the Moores. Democrats said Alito had cast doubt on his ability to judge the case fairly because he conducted four hours of interviews on the Wall Street Journal op-ed page with an editor at the paper and Rivkin.
Alito rejected the demands in a four-page statement from the court, saying there is “no valid reason” for his denial.
___
Associated Press writer Fatima Hussein contributed to this report.