Realize this

This morning the Supreme Court hears oral argument in Moore v. United States. It could be one of the most important cases to be heard by the Supreme Court this year. In it the Court has certified this question for review (references to “App.” are to the appendix to the petition for review filed with the Court by counsel for Mr. and Mrs. Moore):

The Sixteenth Amendment authorizes Congress to lay “taxes on incomes … without apportionment among the several States.” Beginning with Eisner v. Macomber, 252 U.S. 189 (1920), this Court’s decisions have uniformly held “income,” for Sixteenth Amendment purposes, to require realization by the taxpayer. In the decision below, however, the Ninth Circuit approved taxation of a married couple on earnings that they undisputedly did not realize but were instead retained and reinvested by a corporation in which they are minority shareholders. It held that “realization of income is not a constitutional requirement” for Congress to lay an “income” tax exempt from apportionment. App. 12. In so holding, the Ninth Circuit became “the first court in the country to state that an ‘income tax’ doesn’t require that a ‘taxpayer has realized income.”‘ App.38 (Bumatay, J., dissenting from denial of rehearing en banc).

The question presented is:

Whether the Sixteenth Amendment authorizes Congress to tax unrealized sums without apportionment among the states.

The case has been widely covered in the press over the past few days, as it is by the Wall Street Journal story here (December 3) and by the Associated Press in the superficial story here (December 4). The stories are full of dire warnings about what a ruling in favor of the taxpayer might do to the tax code. The real threat is to the Democrats’ dream of a wealth tax. Thus the assault on the Court’s conservative justices.

Illinois Senator Dick Durbin has gone so far as to write Chief Justice Roberts seeking the recusal of Justice Alito. Unfortunately, Durbin is chairman of the Senate Judiciary Committee. He is big and he is swinging. Justice Alito rejected the recusal request made in Durbin’s letter by order dated September 8, 2023, and posted online by the Court here. Justice Alito found Durbin’s letter to be without merit.

I have not followed this case but hope to listen to a recording of the oral argument and read the tea leaves.

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