“What about the appreciation of holdings in securities by millions and millions of Americans, holdings in mutual funds over a period of time without selling the shares in those mutual funds?” Justice Samuel Alito asked. “Can those be taxed under the Sixteenth Amendment?”
U.S. Solicitor General Elizabeth Prelogar, the Biden administration’s top Supreme Court lawyer responded that “I think if Congress actually enacted a tax like that, and it never has, that we would likely defend it as an income tax.” But she quickly added, “you don’t have to agree that that tax would be valid in order to uphold” it.
The Sixteenth Amendment authorizes Congress “to lay and collect taxes on incomes, from whatever source derived” without having to divide the bill among the states according to their population, as is required for other types of taxes.
The case, which the court will decide by late June, is Moore v. United States, 22-800.
This article was provided by Bloomberg News.