US Supreme Court upholds Trump-era tax on foreign assets; handing Biden potential win

A Washington state couple's argument was rejected by the Supreme Court on Thursday, preserving a Trump-era tax on foreign assets. The case could have compromised current tax laws and blown up Democratic talk of a wealth tax.

A 7-2 majority voted to uphold the tax. Justice Clarence Thomas issued a dissent, while Justice Brett Kavanaugh wrote the majority opinion. Kavanaugh reiterated that the opinion was "narrow" and unrelated to the controversial wealth tax matter.

The question of whether the government could tax investment revenues that had not yet been received was at stake in the much-watched lawsuit.

The couple from Washington state, Charles and Kathleen Moore, contested a $15,000 tax they were issued due to their investment in an Indian company. According to the Moores, the taxed profits were never given to them, instead, they were reinvested.

The tax in question was passed by Congress in 2017 by former President Donald Trump. Over ten years, the provision was predicted to raise $340 billion.

A federal wealth tax is something that President Joe Biden and several congressional Democrats have been eyeing for many years, and some conservative organisations warned that the government's win could pave the way for it.

The bottom line, according to Kavanaugh, is that "Moores’ argument, taken to its logical conclusion, could render vast swaths of the Internal Revenue Code unconstitutional.

"And those tax provisions, if suddenly eliminated, would deprive the U. S. Government and the American people of trillions in lost tax revenue," he added.

Biden and other Democrats have advocated higher taxes on the rich to fund their spending proposals, many of which are intended to benefit lower- and middle-class Americans.

Biden has advocated for a "Billionaire Minimum Income Tax," which would impose a 25% tax rate on people worth more than $100 million. This tax would be applied to the "full income," or unrealised profits, of the rich.

One of the attorneys defending the Moores co-wrote two positive opinion pieces praising the justice in the Wall Street Journal last year, which prompted Democrats on Capitol Hill to demand that Justice Samuel Alito resign. Alito objected to the recusal request.