Taking a step back: A couple from Washington state, Charles and Kathleen Moore, are challenging a one-time "repatriation" tax on offshore income that Republicans placed in their 2017 tax law to help transition to a new international tax system. The Supreme Court’s decision to take up Moore v. U.S. came as something of a surprise, for a variety of reasons — including that there hasn’t yet been any difference of opinion at the appeals court level on the issue now before the justices. But one of the going theories on the court’s interest is that its conservative majority might want to take a preemptive strike against the kind of wealth taxes championed by Sen. Elizabeth Warren (D-Mass.). There are definitely questions about whether that kind of tax would pass constitutional muster, particularly if considered by this set of justices. But it’s also not the kind of idea that is going to pass this particular Congress anytime soon. Meantime, the Moores’ basic argument is that they were taxed on income they never received, subjecting them to an illegal tax on unrealized gains. But experts worry that if the Supreme Court doesn’t tread carefully, an opinion favoring the Moores could make lots of existing taxes, on items like offshore income and on those who renounce citizenship, susceptible to new legal challenges. Interestingly, the Moores and their attorneys seem to be aware of that — and try to maintain in their briefs that the repatriation tax is different, so the justices can back the plaintiffs without wreaking havoc. But those same experts also aren’t really persuaded by that argument, either. What kind of numbers are we talking about? So let’s put some parameters on this potential chaos that we’re talking about. The Urban-Brookings Tax Policy Center projects that the U.S. collects tens of billions of dollars a year in taxes on unrealized income, with that number only predicted to rise in the years to come — from some $87 billion next year to $125.5 billion in 2028. Those taxes include the new minimum tax on corporate book income that Democrats enacted last year; a minimum tax on foreign earnings from that GOP tax law, known as the levy on Global Intangible Low-Taxed Income (or GILTI); and a tax on the retained profits of partnerships and other pass-through businesses. The government is expected to raise at least $26 billion in 2028 from each of those taxes, though the Tax Policy Center also noted that an estimated collection amount doesn’t necessarily equate to revenue lost if a tax is struck down. (Taxpayers could change their behavior, for instance — not to mention who knows exactly what the courts will do with any of this.) NOT A GREAT IDEA, WE THINK: The business community is increasingly mobilizing against a new requirement from the Financial Accounting Standards Board that would force companies to disclose more of their tax data. FASB, which sets the national accounting standards in the U.S., unanimously decided to take that step last month. (Australia and the European Union have been making similar bids to increase tax transparency.) Now, just several weeks later, the National Foreign Trade Council is already out with new research that argues the requirements would hamstring businesses by increasing their regulatory burden. The group’s research relies on feedback from companies themselves — more than 150 in all, from a variety of industries. The basic takeaways: Putting tougher disclosure requirements on companies will be expensive, in the form of more employees and added technology costs, which can lead to businesses having to raise prices. The new requirements could also lead to job losses and spook investors, the new paper argues. “At a time of economic recovery, these rules may decrease corporate investment which could lead to a decrease in GDP,” said Anne Gordon, the vice president for international tax policy at NFTC. That point in particular is under some dispute. FASB, for instance, has said the new requirements will benefit investors, who it contends would get a clearer picture of a company’s financial situation.
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