Charles and Katherine Moore are about to spend their day in America Supreme Court They believe tax bills over $15,000 are unconstitutional.
The couple from Redmond, Washington, claimed they had to pay the money because they invested in an Indian company and, as Charles Moore, 62, said in a sworn statement, they ” “No distribution, dividend or other payment has ever been received.”
But significant parts of the story they tell appear to be at odds with the public record.
The Moores are the public face of a high court case backed by business and conservative political interests that could raise questions about other parts of the U.S. tax code and preclude a bill that was widely discussed but never enacted. wealth tax. The case is scheduled to be argued on December 5.
The Moores are the latest example of plaintiffs whose lawsuits appear to be merely exercising their legal rights, but whose cases are supported by others with vast amounts of money or social problems that come with them. The Moores sought assistance from the Anti-Regulatory Competition Enterprise Institute.
Attorney Paul Clement emphasized the importance of the case at a recent Heritage Foundation event, saying, “The constitutionality of a wealth tax will likely be decided in the context of this case.”
Details of the Moores’ involvement in the company, which was originally called KisanKraft Machine Tools Private Limited, were first reported by Tax Notes for tax professionals. These public documents are documents submitted to the Government of India.
The focus of the dispute in this case lies in the following clauses: 2017 tax bill It was enacted by the Republican-controlled Congress and signed by then-President Trump. The law applies to companies owned by Americans but doing business abroad. It imposes a one-time tax on investors’ share of profits that have not been passed on to them to offset other tax benefits. The measure is expected to generate $340 billion in tax revenue.
The Moores, along with the U.S. Chamber of Commerce and conservative think tanks, argued the provision violated the Sixteenth Amendment, which allows the federal government to impose an income tax on Americans.
The $15,000 tax bill represents the Moore family’s share of KisanKraft’s profits.
“How can you be required to pay income tax if you don’t have any income?” Charles Moore asks in a video released by the Competitive Enterprise Institute.
But Moore is not a passive investor with no influence on the company. He has worked at Microsoft during his software development career and served on KisanKraft’s board of directors for five years.
“The story told by the Moores about Charles’ involvement in KisanKraft is directly inconsistent with the fiduciary duties of an individual who holds a board seat at an Indian company,” said Mindy Herzfeld, director of the master’s program in international taxation at the University of Florida School of Law, in a tax note.
There were other indications that Moore’s involvement with KisanKraft was more extensive than his testimony suggested. The company paid for four of his trips to India, and he made at least two other investments in addition to the $40,000 stake he put in in 2006.
Moore is also prepared to invest another $250,000. KisanKraft eventually returned the money along with 12% interest.
Another inconsistency is that while the Moores said they invested the money together, only Charles Moore’s name appears in company documents.
The couple and their attorneys did not disclose any information in legal filings in three different federal courts, including the Supreme Court.
“The original statement upon which this case is based is riddled with lies,” said Reuven Avi-Yonah, an international tax expert at the University of Michigan Law School.
In a brief conversation with The Associated Press, Katherine Moore said she and her husband would not discuss the case and referred questions to their attorneys. Moore’s lead attorney, Andrew Grossman, did not return a message seeking comment.
Those omissions, coupled with the Moores’ failure to take advantage of other legal options that could have delayed, if not eliminated, their tax liability, led Avi-Jonah and other international tax law experts to suspect the case was an attempt to resolve a larger fabricated problem. Some prominent Democrats have proposed taxing billionaires but have never implemented them.
The wealth tax would apply not to the income of the wealthiest Americans but to their assets, such as stock holdings, which would now only be taxed when sold.
“There’s really no reason for the court to accept it other than to send a warning to Congress not to pass a billionaire tax,” said Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.
Rosenthal said the court’s ruling could overturn other provisions of the tax code, including measures related to partnerships, limited liability companies and other business organizations.
Changes to these provisions may also affect the financial well-being of some judges.
Chief Justice John Roberts holds an eighth interest worth up to $15,000 in an Irish partnership that owns a cottage in County Limerick, Ireland, Clarence Thomas Judge Thomas’ wife, Ginni, owns an LLC that made between $50,000 and $100,000 in income from Nebraska real estate last year, according to the judge’s financial disclosure form.
Two other recent Supreme Court cases brought by conservative interest groups have also raised questions about whether facts were manipulated to bring disputes to court. One involved a wedding website designer in Colorado who didn’t want to work with same-sex couples, and a public high school football coach in Washington who wanted to pray on the field.
Rosenthal said “the ugly facts matter” and the judge could send the Moores’ case back to a lower court without making a ruling.
Charles Moore said in a sworn statement that he agreed to invest in the company founded by his friend and former Microsoft colleague Ravindra “Ravi” Kumar Agrawal company because he liked the business plan and trusted his friends.
“Moreover, I think KisanKraft was founded for a noble purpose and has the potential to improve the lives of small and marginal farmers in India,” Moore said.
The case has raised ethical questions. Senate Democrats asked Judge Samuel Alito to withdraw from the case because of his interactions with David Rivkin, another attorney representing the Moores. Democrats said Alito cast doubt on his ability to judge the case impartially because of a four-hour interview he gave to a Wall Street Journal op-ed page editor and Rifkin.
Alito rejected the requests four page statement In a statement issued by the court, he said there was “no valid reason” for his recusal.
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Associated Press writer Fatima Hussain contributed to this report.
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