In a 7-2 decision, the high court opined that Congress was within its authority to enact a one-time levy on investors’ shares of profits that have not been passed along to them, which some critics had speculated could lay the groundwork for a future wealth tax.found that the anti-tax argument, brought by a Washington state couple, “taken to its logical conclusion, could render vast swaths of the Internal Revenue Code unconstitutional.
Justices Clarence Thomas and Neil Gorsuch dissented, with Thomas writing that the provision violated the 16th Amendment establishing an income tax. Competitive Enterprise Institute initiated the Moores’ lawsuit and argued that the provision amounted to an “unapportioned direct tax on their shares,” which under current law can be taxed only when they are sold.
“Even as the majority admits to reasoning from fiscal consequences, it apparently believes that a generous application of dicta will guard against unconstitutional taxes in the future,” Thomas responded in the dissent.Democrats in Congress have mulled different iterations of a so-called “wealth tax,” none of which have so far come to fruition.
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