US Supreme Court won’t upend tax on Americans’ foreign earnings

The US Supreme Court recently upheld a tax on Americans with investments in certain foreign corporations in a 7-2 decision, rejecting a challenge from Charles and Kathleen Moore of Washington. The tax, part of a 2017 Republican-backed law under former President Trump, applies to US-controlled foreign companies. \r

The Moores argued that taxing unrealized gains violated the Constitution's 16th Amendment, which permits income taxation only on realized profits. The case's implications sparked debate over congressional taxation powers and potential fiscal impacts, with the Justice Department warning of a $340 billion loss over a decade if the tax were invalidated. \r

The controversy also involved calls for Justice Samuel Alito's recusal due to perceived conflicts of interest, which he declined, citing his impartiality despite ties to the plaintiffs' legal team.