Davis Polk partner Michael Mollerus was quoted in the Financial Times discussing the Supreme Court decision in Moore v. United States. The court ruled 7-2 that a provision of the 2017 Tax Cuts and Jobs Act known as the “mandatory repatriation tax,” does not violate the Constitution, affirming a decision by the Ninth Circuit. The provision required U.S. taxpayers who owned shares in foreign corporations to pay a one-time tax on their share of the corporation’s earnings. The court emphasized that its ruling is narrow and limited in nature, and did not answer the question of whether a wealth tax would be constitutional. It is limited to: (i) taxation of the shareholders of an entity, (ii) on the undistributed income realized by the entity, (iii) which has been attributed to the shareholders, and (iv) when the entity itself has not been taxed on that income.

Michael noted that campaigners against a wealth tax “got half a loaf.”  

“People are putting down stakes for the next case, and only one justice came out saying realization is not required. Four came out against,” he said.

“US Supreme Court sidesteps wealth tax question in closely watched case,” Financial Times (June 20, 2024) (subscription required) 

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