(The Center Square) – While the U.S. Supreme Court has yet to announce whether it will take up a case regarding whether or not a Washington state capital gains tax is an income tax, it is currently reviewing the legality of a federal tax that poses its own legal challenge.
The lawsuit filed by a Washington couple disputes whether they owe $15,000 under a one-time tax enacted in 2017 that applies to the earnings of U.S. residents who generated income from shares in foreign companies.
The lawsuit has prompted dozens of amicus briefs, many of them centered around the issue of whether income has to be “gained” or “realized” in order to be taxed. According to the couples’ lawsuit, they reinvested the capital gains generated from their shares into the company but never realized a profit.
The reason for the high interest is due to how the SCOTUS ruling could interpret the 16th Amendment, which allows Congress to “collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. The plaintiffs argue that for it to be taxable, that income needs to be “realized.”
As proof, they cite the 1920 case Eisner v. Macomber, in which SCOTUS ruled that pro rata stock dividends could not be taxed as income if the stock owner received no cash or property and their amount of ownership remained the same.
During a Dec. 5 oral argument in front of SCOTUS, the plaintiffs’ legal counsel told the high court that “it is undisputed that the petitioners realized nothing from their stock investment.” Because of that, he added, it constitutes a tax on property ownership, which would require it be apportioned.
Many of the justices levied numerous questions to both sides over how they define income for tax purposes. The federal government’s legal counsel argued that Congress has the authority to tax unrealized income and has done so in the past.
One justice noted that the main issue appeared to be that the tax applied to income earned in prior years.
While those in favor of the tax’s legality claim a decision against it could render much of the Internal Revenue Code unconstitutional, others like the U.S. Chamber of Commerce warned in an amicus brief that a prior 9th Circuit Court of Appeals ruling on the lawsuit in favor of the tax means that “businesses and their shareholders could be subject to taxes on anything that the government later deems “income”—even increases in value that could later disappear as valuations or markets fluctuate. Companies no longer control their own realization decisions; Congress does.”
As far as social discrimination is concerned, discriminating against in tax laws because of the high level of one’s earned income or personal property or amount of financial income, just first discriminates against , then undermines the very human longing to better one’s self, and is the most costly collective American legalized discrimination of all time. Taxing the succeeders and rewarding the failures is a recipe for national failure,,,,the kind we are going through right now thanks to the democrats. Destroy the individual’s ability to create wealth, just collectively destroys the financial condition of a nation. When it gets to the point where a nation pays out in interest on national debt to foreign investors more than we are paying in national defense, the ultimate conquest of that nation is less than a generation away. When our national wealth is depleted past an ability of redemption, we will be left as vulnerable as Putin and the Russians with only the threat of WWIII to keep the wolves at bay, both at home and abroad. Financially destroy the productive wealth creating individual in discriminatory laws and taxes that the unproductive never have to face but in fact get rewarded by, and the collapse of the National Collective cannot be far behind.
One of our founding fathers, maybe Ben Franklin, warned us exactly about this. I don’t remember. Part of the fix is repealing the 17th Amendment. Another part is a permanently fixed flat tax, with no loop holes, by amending the 16th Amendment. Most federal agencies need to be eliminated as they are blatantly unconstitutional…
What get’s me, is we have MILLIONS IN THIS NATION working (illegally) for cash under the table jobs, who are not paying ONE RED CENT in taxes, yet THOSE FOLK the IRS ignores.
BUT HERE’s a couple USING THEIR MONEY TO further innovation and workers, and they go after them like a hungry shark smelling fresh meat in the ocean.
AND SOMEONE tell me, WHY THE HELL our govt wants to tax money YOU MAKE OUT SIDE OF THIS NATION?
Or are they really thinking the ENTIRE WORLD is their jurisdiction!??