Thu. Jul 18th, 2024

Supreme Court rejects challenge to tax on foreign corporate investments

By 37ci3 Jun20,2024

WASHINGTON – The Supreme Court On Thursday, some worried that it could jeopardize future efforts to impose a wealth tax on the super-rich, backing a tax on foreign corporate investment.

The case had previously attracted attention after the conservative Justice Samuel Alito refused to budge Because of his connections with one of the lawyers who protested the one-time tax introduced in 2017.

Alito was part of a 7-2 majority that rejected the challenge to the measure.

In the majority opinion, Judge Brett Kavanaugh said the ruling was a narrow one and had nothing to do with the potential wealth tax it indicated, which would be taxed on assets rather than income.

He wrote that “nothing in this opinion should be read to authorize any hypothetical Congressional effort to tax both the corporation and its shareholders or partners on the same retained earnings realized by the corporation.”

“Those are potential problems for another day, and we’re not addressing any of those problems here,” he said.

The provision was part of a major tax law passed by the Republican-led Congress and signed by then-President Donald Trump.

The case, based on the 16th Amendment to the Constitution, is about whether people are forced to pay taxes on their holdings in foreign companies, even if they receive no income from them. The 16th Amendment states that Congress has the power to “raise taxes upon revenues.”

David Rivkin, one of the lawyers involved in the case against the federal government, interviewed Alito in two articles published in The Wall Street Journal, addressing the recent allegations of ethics violations in the court and the power of Congress to legislate on the matter.

Rivkin represents Washington state-based Charles and Kathleen Moore, who invested in the India-based company, although she did not argue the case before the Supreme Court.

In 2005, the Moores invested $40,000 in a company called KisanKraft Machine Tools. They said that although the company is profitable, they do not receive dividends, the money is instead invested in the business. Because of this, the Moores did not pay taxes that the US government determined as income from the company from 2006 to 2017.

After the new law went into effect, the Moores paid almost $15,000 in additional taxes and later asked for a refund. They argued that the increase in the value of the capital investment did not constitute income, arguing that the tax was illegal.

In a dissenting opinion, Justice Clarence Thomas, joined by fellow conservative Justice Neil Gorsuch, said the money in question should not be taxed because “the Moores never received any of the investment gains.”

Source link

By 37ci3

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *