Moore v. United States: Avoiding the Tough Questions

*J.D., University of Virginia School of Law, expected 2025. Thank you to the members of the Virginia Law Review for their thoughtful feedback.Show More

Introduction

Charles and Kathleen Moore owed less than $15,000 due to the Mandatory Repatriation Tax (“MRT”),¹ 1.I.R.C. § 965.Show More a tax enacted as part of the 2017 Tax Cuts and Jobs Act. While the economic consequences of the tax were relatively inconsequential for the Moores, they hoped to convince the Supreme Court to make highly consequential changes to tax law more generally by challenging the MRT.² 2.See Brief for Petitioners at 12–13, Moore v. United States, 144 S. Ct. 1680 (2024) (No. 22-800).Show More The challenge put large portions of the Internal Revenue Code—provisions providing trillions in tax revenue—at risk.³ 3.See infra notes 17, 91–92.Show More The case was also highly relevant to the constitutionality of wealth taxes, a topic of rising interest among scholars and politicians.⁴ 4.See, e.g., Thomas Kaplan, Bernie Sanders Proposes a Wealth Tax: “I Don’t Think That Billionaires Should Exist,” N.Y. Times (July 16, 2020), https://www.nytimes.com/2019/09/2‌4/us/politics/bernie-sanders-wealth-tax.html [https://perma.cc/SRB9-MNES]; Jonathan Curry, UC Berkeley Economists Chosen as Tax Notes Federal’s Persons of the Year, Tax Notes (Dec. 16, 2019), https://www.taxnotes.com/special-reports/tax-policy/uc-berkeley-eco‌nomists-chosen-tax-notes-federals-persons-year/2019/12/13/2b617 [https://perma.cc/P622-Y‌W95].Show More In Moore v. United States,⁵ 5.144 S. Ct. 1680 (2024).Show More the Court upheld the MRT and related tax provisions while strategically trying to avoid providing explicit guidance on other hot-button issues.

The basic facts of the case are simple. The Moores bought 13% of an Indian company, KisanKraft, in 2006 for $40,000.⁶ 6.Id. at 1686.Show More While profitable, KisanKraft never distributed any income to the Moores or any American shareholders.⁷ 7.Id.Show More Even so, the MRT subjected the Moores to a tax on 13% of KisanKraft’s accumulated income from 2006 to 2017, resulting in the Moores owing $14,729 in taxes.⁸ 8.Id.Show More They challenged the constitutionality of the MRT, but the district court dismissed the challenge, and the U.S. Court of Appeals for the Ninth Circuit affirmed.⁹ 9.Id.Show More

The first Part of this Comment provides high-level background on the MRT,¹⁰ 10.The MRT is an “extraordinarily complicated” tax, so a detailed explanation is outside the scope of this Comment. Sean P. McElroy, The Mandatory Repatriation Tax Is Unconstitutional, 36 Yale J. on Regul. Bull. 69, 76 (2018).Show More general tax principles, and taxation provisions in the Constitution. The second Part outlines the various opinions in Moore. Finally, the third Part takes a critical look at the opinions and argues that the Court’s decision is broader than it appears. Further, it argues that in the Court’s effort to defend long-standing precedent against the Moores’ challenge, the Court failed to adequately justify its decision. Additionally, the third Part provides thoughts on what Moore means for the constitutionality of a wealth tax.

1.  I.R.C. § 965. ↑
2.  See Brief for Petitioners at 12–13, Moore v. United States, 144 S. Ct. 1680 (2024) (No. 22-800). ↑
3.  See infra notes 17, 91–92. ↑
4.  See, e.g., Thomas Kaplan, Bernie Sanders Proposes a Wealth Tax: “I Don’t Think That Billionaires Should Exist,” N.Y. Times (July 16, 2020), https://www.nytimes.com/2019/09/2‌4/us/politics/bernie-sanders-wealth-tax.html [https://perma.cc/SRB9-MNES]; Jonathan Curry, UC Berkeley Economists Chosen as Tax Notes Federal’s Persons of the Year, Tax Notes (Dec. 16, 2019), https://www.taxnotes.com/special-reports/tax-policy/uc-berkeley-eco‌nomists-chosen-tax-notes-federals-persons-year/2019/12/13/2b617 [https://perma.cc/P622-Y‌W95]. ↑
5.  144 S. Ct. 1680 (2024). ↑
6.  Id. at 1686. ↑
7.  Id. ↑
8.  Id. ↑
9.  Id. ↑

10.  The MRT is an “extraordinarily complicated” tax, so a detailed explanation is outside the scope of this Comment. Sean P. McElroy, The Mandatory Repatriation Tax Is Unconstitutional, 36 Yale J. on Regul. Bull. 69, 76 (2018). ↑