Moore v. United States

The Mandatory Repatriation Tax (MRT) does not exceed Congress’s constitutional authority under the 16th Amendment. Justice Brett Kavanaugh authored the majority opinion of the Court. Congress has the constitutional authority to either tax an entity directly on its income or attribute that income to the entity’s shareholders or partners and tax them instead. It has consistently exercised this power, taxing partners on partnership income, shareholders of S corporations on corporate income, and American shareholders of foreign corporations on certain undistributed income (e.g., through subpart F). The MRT follows this established pattern by attributing undistributed income of American-controlled foreign corporations to their American shareholders and is therefore not meaningfully different from these other longstanding taxes. Justice Ketanji Brown Jackson authored a concurring opinion to emphasize that, before taking up petitioners’ invitation to strike down a lawfully enacted tax, the Court would need to be persuaded of several additional arguments that the Court did not reach in this case, including the argument that Congress can tax income only if it is actually received or “realized” and that, even if a uniform tax violates the Sixteenth Amendment, it must also be found to be a direct tax before the Court would require apportionment. Justice Amy Coney Barrett authored an opinion concurring in the judgment, in which Justice Samuel Alito joined, agreeing with the Court’s ultimate conclusion to uphold the MRT, but disagreeing with aspects of the majority’s reasoning. Specifically, she believes the Sixteenth Amendment does not authorize Congress to tax unrealized sums without apportionment, and its power to attribute corporate income to shareholders is more limited than the majority suggests. She concurs in the judgment primarily because the Moores conceded that Subpart F (a similar tax provision) is constitutional, and she agrees with the majority that the MRT is not meaningfully different from Subpart F in how it attributes corporate income to shareholders. Justice Clarence Thomas authored a dissenting opinion, in which Justice Neil Gorsuch joined, arguing that the Court upholds the MRT only by ignoring the question presented. Specifically, it does “not address the Government’s argument that a gain need not be realized to constitute income under the Constitution,” but instead “whether Congress may attribute an entity’s realized and undistributed income to the entity’s shareholders or partners, and then tax the shareholders or partners on their portions of that income.”