The Supreme Court upheld a Trump-era tax on overseas investments on Thursday (June 20), in a 7-2 majority ruling. The tax, part of a larger package enacted by Congress in 2017, was challenged by a Washington state couple, Charles and Kathleen Moore, who received a $15,000 tax bill due to their investment in an India-based company. The couple argued that the profits were reinvested and never distributed to them.
Justice Brett Kavanaugh, who wrote the majority opinion, emphasized that the ruling was narrow and did not implicate the ongoing debate over a wealth tax. The tax in question was a one-time mandatory repatriation tax levied on shareholders on undistributed profits accrued between 1986 and the end of 2017 by certain foreign corporations majority-owned by Americans. The provision was expected to raise $340 billion over a decade.
The case was closely watched due to its potential impact on other current tax provisions that typically fall on wealthy Americans, including several international tax rules designed to prevent US residents or corporations from shifting assets and operations overseas to avoid paying federal taxes. The ruling was seen as a win for the Biden administration, which has proposed new taxes on the wealthy to fund spending plans aimed at helping lower-income and middle-class Americans.
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