BIG DAY IN COURT: As a reminder, the core question at the center of Moore is whether a taxpayer needs to realize income before the government can tax it. The plaintiffs’ lawyers in the case have argued that a government that can tax unrealized income could also seek to enact a wealth tax — an idea sharply opposed by most people on the right. In fact, lots of people watching this case wonder whether the Court’s conservative majority took it expressly to rule out a wealth tax — while, to the consternation of the business community, some tax law professors have urged the justices in their own brief to make it clear that such a levy would be blessed under the Constitution. But here’s where tax experts, even those stridently opposed to a wealth tax and who believe it to be unconstitutional, hope the justices tread carefully. Because strange as it might sound, there definitely are cases in which the government does tax unrealized income, or what’s basically income that a taxpayer doesn’t actually have their hands on. Some of those cases, as Steve Rosenthal of the Urban-Brookings Tax Policy Center recently pointed out, are when the government has sought to limit the ability of companies or taxpayers to use offshore avenues to avoid paying taxes. Those aren’t the only instances of the U.S. taxing unrealized income, mind you, and the lawyers for the plaintiffs, Charles and Kathleen Moore, have tried to distinguish the repatriation tax from those other examples of income being taxed before it’s received. Still, the possibilities illustrate the particular concerns of more-liberal experts that the Supreme Court could rip up some of the government’s methods for ensuring that the rich don’t dodge taxes. Other issues to watch out for: Accountable.US, an oversight group run by Democratic operatives, is seeking right before arguments to link this case to the broader ethics questions that Democrats have been raising about the court. The organization specifically singled out the billionaire hedge fund manager Paul Singer and Leonard Leo, the co-chairman of the Federalist Society, arguing that they both stand to benefit if the court rules in favor of the Moores. For instance, several companies linked to the hedge fund run by Singer, who ProPublica noted took a fishing trip with Justice Samuel Alito some years ago, could be in for hundreds of billions of dollars in refunds if the mandatory repatriation tax is struck down, according to Accountable.US. UP TO THE HILL: Meanwhile, there are two big tax stories to monitor up in the Capitol this week. It really is crunch time if Congress wants to complete a tax bill this year, with lawmakers likely to work for only a couple more weeks before calling it a day for 2023. Last week saw a new burst of optimism over a potential agreement to expand both the Child Tax Credit and some preferences for business, even as lawmakers acknowledged they have plenty of hurdles to clear to make that happen. Still, advocates on both sides are doing what they can to gin up interest in getting the deal across the finish line. A group of some 145 rank-and-file House Republicans, led by Rep. Rudy Yakym of Indiana, pressed for action on the business tax cuts last week. And this week, advocates for the child credit are planning a rally in D.C. To even more contentious issues: By all accounts, the leading tax writers in both parties are engaged in constructive talks over a tax bill. But what’s decidedly not bipartisan is the House GOP push potentially to impeach President Joe Biden, with Speaker Mike Johnson and other top Republicans signaling that a vote to authorize an impeachment inquiry might come pretty soon. Ways and Means Chair Jason Smith (R-Mo.) has played a rather central role in the House’s investigation of Biden and his son Hunter, something that has drawn criticism from his Democratic colleagues. And to that end, the Ways and Means Committee is planning a private hearing on Tuesday with two whistleblowers who were unhappy with how the IRS handled its investigation into Hunter Biden. Smith has said in recent interviews that those whistleblowers, who have previously testified before Congress, have brought new documents that raise additional questions about the Justice Department’s inquiry into Hunter Biden’s tax issues. But the announcement of this week’s hearing drew a particularly sharp response from the panel’s top Democrat, Rep. Richard Neal of Massachusetts, who called it a “meek attempt” to breathe new life into a “flailing inquiry.” “In the least productive Congress since the Great Depression, my Republican colleagues need to put the weapon of mass distraction down and pick up the work of the American people,” said Neal, charging that the GOP’s investigation has been trafficking in “debunked conspiracy theories.”
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