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Supreme Court Upholds Trump-Era Foreign Earnings TAX

Published

5 months ago

2024-06-20

On Thursday, the US Supreme Court upheld an obscure tax established as part of Trump’s big 2017 reform package that targets U.S. taxpayers who own shares in certain foreign firms.

The Supreme Court concluded 7-2 that the so-called mandatory repatriation tax, or MRT, is constitutional under Article I and the 16th Amendment, rejecting a lawsuit by a Washington couple, Charles and Kathleen Moore, who claimed the provision violated the Constitution. Justice Brett Kavanaugh authored the majority opinion. Justices Clarence Thomas and Neil Gorsuch dissented.

The Supreme Court’s decision was narrow, but by declining to overturn the tax, the justices avoided closing the door on Democrats’ proposals to levy taxes on the nation’s richest earnings. Kavanaugh emphasized that the court’s analysis ignores the difficulties created by holdings, wealth, or net worth taxes, as well as appreciation taxes.

“Those are potential issues for another day, and we do not address or resolve any of those issues here,” the Supreme Court judge’s counsel wrote. “In the Moores’ instance, Congress has long taxed an entity’s shareholders on its undistributed revenue, as it did with the MRT. This Court has long sustained such taxes, and we continue to do so with the MRT.

The high court opinion is also expected to allay fears about the impact of a sweeping decision rejecting the required repatriation tax on other elements of the tax legislation. Kavanaugh acknowledged the potential repercussions of such a finding, stating that if the Moores’ argument is adopted, “vast swaths” of the Internal Revenue Code may be declared unconstitutional.

“And those tax provisions, if suddenly eliminated, would deprive the U. S. government and the American people of trillions in lost tax revenue,” he wrote on behalf of the coalition. “The logical ramifications of the Moores’ thesis would thus oblige Congress to either dramatically slash important national programs or significantly increase taxes on the remaining sources available to it—including, of course, ordinary Americans. The Constitution does not need such a fiscal disaster.”

Dan Greenberg, general counsel of the Competitive Enterprise Institute, which represented the Moores, expressed disappointment with the verdict, which allows the government to collect income taxes on overseas stockholders who have never earned income.

“We think that is unfair, because the Constitution authorizes Congress to tax people on their income, not the income of foreign businesses that they do not control,” according to a press release.

Supreme Court Moore v. U.S.

The tax at the center of the case, known as Moore v. U.S., is imposed one time on U.S. taxpayers who hold shares of certain foreign corporations. The Moores challenged the measure after they were hit with a nearly $15,000 tax bill for 2017 as a result of the law, which required them to pay levies on their share of reinvested lifetime earnings from an India-based company called KisanKraft Tools.

The Moores had invested $40,000 in the company in 2006 in exchange for a 13% stake, and did not receive any distributions, dividends or other payments from it.

But the mandatory repatriation tax, enacted through the Tax Cut and Jobs Act that was signed into law by former President Donald Trump, taxed U.S. taxpayers who owned at least 10% of a foreign company on their proportionate share of that company’s earnings after 1986. The tax was projected to generate roughly $340 billion in revenue over 10 years.

Though KisanKraft reinvested its earnings in the years after its founding, rather than distributing dividends to shareholders, the tax still applied to the Moores.

The Moores paid, but filed a lawsuit against the federal government to obtain a refund and challenge the constitutionality of the mandatory repatriation tax.

A federal district court ruled for the government and dismissed the case, finding that the mandatory repatriation tax is permitted under the 16th Amendment, which grants Congress the authority to tax “incomes, from whatever source derived.”

The U.S. Court of Appeals for the 9th Circuit upheld the lower court’s decision, ruling that nothing in the Constitution prohibits Congress from “attributing a corporation’s income pro-rata to its shareholders.” The 9th Circuit noted that courts have consistently upheld other similar taxes, and warned that finding the measure unconstitutional would call into question many other long-standing tax provisions.

The Supreme Court affirmed the 9th Circuit’s ruling and found that by 1938, its precedents had established a rule that contradicted the Moores’ argument in their case. That line of prior decisions, Kavanaugh wrote for the court, “remains good law to this day.”

Citing those earlier rulings and the similarities between the mandatory repatriation tax and other tax provisions, the court concluded that the measure “falls squarely within Congress’s constitutional authority to tax.”

Justice Amy Coney Barrett issued a concurring opinion, joined by Justice Samuel Alito, in which she agreed with the outcome of the case, but split with the majority’s reasoning. Addressing the question that was before the court, Barrett said that the 16th Amendment does not authorize Congress to tax unrealized sums without apportionment to the states.

In a dissenting opinion joined by Gorsuch, Thomas said the Moores were correct in challenging the mandatory repatriation tax as unconstitutional. Because the couple never actually received gains from their investment, those unrealized gains couldn’t be taxed as income under the 16th Amendment, he wrote.

“The fact that the MRT has novel features does not mean that it is unconstitutional. But, the MRT is undeniably novel when compared to older income taxes, and many of those differences are constitutionally relevant,” he wrote. “Because the MRT is imposed merely based on ownership of shares in a corporation, it does not operate as a tax on income.”

Thomas criticized the majority over its concerns about the impact a broad decision would have on other longstanding taxes, writing that “if Congress invites calamity by building the tax base on constitutional quicksand, ‘the judicial power’ afforded to this court does not include the power to fashion an emergency escape.”

He also rebuffed the majority’s contention that its ruling does not speak to the constitutionality of other taxes that may be passed by Congress, such as a wealth tax.

“Sensing that upholding the MRT cedes additional ground to Congress, the majority arms itself with dicta to tell Congress ‘no’ in the future,” Thomas wrote. “But, if the court is not willing to uphold limitations on the taxing power in expensive cases, cheap dicta will make no difference.”

During oral arguments in December, the justices seemed sympathetic to concerns about how a sweeping ruling would reverberate across the U.S. tax system and threaten existing tax laws.

But some of the justices sought clarity on the limits of Congress’ taxing power. Lawyers for the Moores had warned the court that allowing a tax on income that has not yet been realized, or received, would pave the way for lawmakers to levy taxes on all manner of things, such as retirement accounts or gains in the value of real estate.

Justice Samuel Alito had faced pressure from some congressional Democrats to recuse himself from the case because of interviews he participated in with an editor at the Wall Street Journal and David Rivkin, a lawyer who represented the Moores.

The justice declined to step aside from the case, arguing there was “no valid reason” for him to do so.

Source: CBS News

Geoff Thomas

Geoffrey Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.

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Trudeau Accused of Sowing Divisions Between Sikhs and Hindus

Published

2 days ago

2024-11-06

Geoff Thomas

Pierre Poilievre, the Conservative Leader, has accused Prime Minister Justin Trudeau of sowing “divisions” that culminated in the violent altercation between Sikh separatists and Hindu devotees outside a Hindu temple in Brampton, Ontario.

Justin Trudeau initiated the question period by condemning Poilievre’s reticence regarding the violence in South Asian communities as “deafening.”

Poilievre refuted the assertion by accusing Trudeau of exploiting the matter to divert attention from domestic economic concerns.

“Consequently, he implements divisions in his residence.” Poilievre stated, “These divisions are the consequence of his actions.”

“Currently, sectarian riots are occurring on the streets of Brampton.” This has never occurred before the tenure of this prime minister. Is he accountable for the divisions he has incited and the ensuing violence?

Trudeau Must Assume Responsibility

Mr. Pierre Poilievre, the Conservative Leader, requested that the Prime Minister assume responsibility for the divisions and violence in Canada. In response, Prime Minister Justin Trudeau addressed Poilievre’s refusal to obtain security clearance to review foreign interference documents.

Trudeau, who has frequently employed a phrase in the question period recently, urged Poilievre to undergo the security clearance procedure to receive a briefing from Canada’s intelligence and security agencies regarding potential threats to the country.

Trudeau’s remarks exacerbate an already precarious police situation, which has the potential to further deteriorate the diplomatic relationship between Canada and India.

Police dispersed a second day of demonstrations outside a Hindu temple in Brampton, Ontario, on Monday. The temple has been the site of violent clashes that have resulted in arrests and a public safety alert.

During the Indian consular officials’ visit to the Hindu Sabha Mandir temple in Brampton on Sunday at midday, violence erupted.

Peel Regional Police issued a public safety alert on Monday evening regarding the presence of weapons at a demonstration near a Hindu temple in Brampton, Ont. The demonstration had been the site of violent clashes between demonstrators the previous day.

Canada India Tensions

Social media videos depict demonstrators holding banners in support of Pro-Khalistan separatism, a proposed independent Sikh homeland in northern India, and engaging in physical altercations with other individuals, some of whom are holding India’s national flag.

Later, an off-duty Sergeant of the Peel police in Brampton, Ontario, was identified as one of the pro-Khalistan protesters.

In the interim, the violence prompted Indian Prime Minister Narendra Modi to make a rare comment during a period of escalating diplomatic tensions between the two countries.

“I unequivocally condemn the intentional destruction of a Hindu temple in Canada.” “The cowardly attempts to intimidate our diplomats are equally appalling,” he shared on social media.

No amount of violence will ever undermine India’s resolve. We anticipate that the Canadian government will maintain the rule of law and ensure justice.

Last September, Trudeau expressed that there were credible allegations that the Indian government was involved in the assassination of Sikh activist Hardeep Singh Nijjar in Canada, which marked the beginning of the deterioration of relations between the two countries. India has vigorously denied the charge.

Geoff Thomas

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Police Officer Suspended for Joining Pro-Khalistan Protest

Published

2 days ago

2024-11-06

Geoff Thomas

A Brampton, Ontario, police officer was suspended on Monday following the viralization of a video on social media that showed him participating in a pro-Khalistan protest outside a Hindu temple.

According to CBC News, the suspended Peel Regional Police officer, Harinder Sohi, was videotaped brandishing a Khalistan flag while other participants in the protest chanted anti-India slogans. He was not wearing a police uniform.

Sohi served as a Sergeant for the Peel Regional Police.

In an email to CBC News, Media Relations Officer Richard Chin informed the organization that it is “aware of a video circulating on social media that depicts an off-duty Peel Police officer participating in a demonstration.”

“This officer has since been suspended in accordance with the Community Safety and Policing Act,” according to him.

“We are investigating the circumstances in totality depicted in the video and are unable to provide further information until this investigation is complete.”

Peel Regional Police have previously stated that three individuals have been charged in connection with the violence that occurred during the visit of Indian consular officials to the Hindu Sabha Mandir temple on Sunday.

Social media videos appear to depict demonstrators holding banners in support of Khalistan, a proposed independent Sikh homeland in northern India, and engaging in a physical altercation with other individuals, some of whom are holding India’s national flag.

The videos appear to depict fist battles and individuals striking each other with poles on the grounds outside the Hindu Sabha Mandir temple.

According to Peel police, the event was ultimately relocated to two additional locations in the neighboring city of Mississauga, where additional demonstrations were also conducted.

Peel police acknowledged the protest on Sunday at noon and announced that they had increased their presence at the Hindu Sabha Mandir temple to preserve public safety and order.

“We acknowledge the right to peacefully and safely protest; however, we will not tolerate criminal activities or violence,” stated Chief Nishan Duraiappah in response to the videos’ dissemination.

“Those that do participate in this activity will be pursued, arrested, and charged.”

The violence elicited condemnations from Canadian political leaders at all levels of government and also prompted Indian Prime Minister Narendra Modi to make a rare comment during a period of escalating diplomatic tensions between the two countries.

Prime Minister Narendra Modi expressed his concern regarding the “deliberate attack” and requested accountability from the Canadian government, which Justin Trudeau heads. He anticipated that the government would uphold the rule of law and ensure justice.

PM Modi expressed his strong condemnation of the deliberately targeted assault on a Hindu temple in Canada in a post on X. The contemptible endeavors to intimidate our diplomats are equally repulsive. No amount of violence will ever be able to undermine India’s resolve.

In the interim, the Minister of External Affairs (MEA) expressed its “profound concern” regarding the safety and security of Indian nationals in Canada, and it anticipates that those who engage in violence will be prosecuted.

The Hindu Sabha Temple in Brampton, Ontario, was the site of violent acts committed by separatists and extremists yesterday. We condemn these actions. “We urge the Canadian government to guarantee that all places of worship are safeguarded from such attacks,” stated Randhir Jaiswal, the spokesperson for the MEA.

India Slams Trudeau Over Pro-Khalistani Sikhs Attack

India Slams Trudeau Over Pro-Khalistani Sikhs Attacking Canadian Hindus

Geoff Thomas

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Pro-Khalistanis Sikhs Attack Hindu Temple in Brampton

Published

4 days ago

2024-11-04

Geoff Thomas

Pro-Khalistanis Sikhs, Hindu Temple, Brampton, Ontario

Pro-Khalistanis Sikhs attack Hindu Temple in Bramption Ontario.

Police in Brampton, Ontario, were summoned to the Hindu Temple after a group of pro-Khalistanis Sikhs attacked Hindu worshipers on Sunday. According to the Hindu Canadian Foundation, supporters of the Khalistaani movement in Canada helped to carry out the “attack.”

Following its posting on X, a video of the attack with demonstrators brandishing Khalistan flags at the Hindu Temple’s front entrance quickly became viral, inciting indignation among the Hindu community in Canada and India.

Chandra Arya, a Liberal MP from Canada, denounced the violence and claimed that under the country’s “freedom of expression,” extremists are getting away with it.

According to Arya, he began to think there might be some truth to the claims that Khalistanis have successfully infiltrated Canada’s law enforcement forces and political machinery.

Today, Canadian Khalistani fanatics have crossed a line. The attack by Khalistanis on Hindu-Canadian worshipers within the Hindu Sabha temple’s grounds demonstrates the extent and blatantness of Khalistani violent extremism in Canada.

In a post on X, he stated, “I start to believe that there is a sliver of truth in the reports that Khalistanis have successfully infiltrated not only our political apparatus but also our law enforcement agencies.”

It is understandable why Khalistani fanatics are receiving a free pass in Canada under the guise of “freedom of expression.” As I’ve been saying for a while, Hindu Canadians must stand up, defend their rights, and hold politicians responsible for the safety and security of our community,” he continued.

Peel Regional Police said they were aware of the demonstration in the city’s northeast and are investigating the situation.

The Canadian Charter of Rights and Freedoms states, “We respect the individual right to protest, but it is still our duty and responsibility to maintain public order and ensure everyone’s safety. ” Therefore, we request the public’s help participating in and supporting a nonviolent and legal protest.

Peel police warned that any acts of violence, threats of violence, or vandalism would be looked into and said they would be more visible and present to keep an eye on the situation.

Taking his X account, Brampton Mayor Patrick Brown also conveyed his dissatisfaction after learning of the “acts of violence” outside the Hindu Sabha.

“In Canada, religious freedom is a fundamental virtue. In their house of worship, everyone ought to feel secure. Brown stated in his letter that he is “completely confident that Peel police will do everything in their authority to keep the peace and hold those accountable who commit acts of violence.” “I strongly condemn any acts of violence outside of a place of worship,” Brown added.

“The violence at the Hindu Sabha Mandir in Brampton was unacceptable,” Canadian Prime Minister Justin Trudeau also posted on X.

Every Canadian has the right to freely and securely follow their religion. “Swiftly responding to protect the community and investigate this incident” was how he praised the cops.

As Ottawa frequently rejected New Delhi’s demands for tough measures against Khalistani radicals in Canada, the incident took place during a time of poor relations between India and Canada. Instead, it sparked a huge diplomatic dispute by accusing India of targeting Khalistani people inside its borders.