MarketWatch Quotes Leila Carney on Moore v. United States

The Supreme Court upheld a federal tax that made a Washington couple pay for their investment gains despite never reaping profits, concluding that their stake in a foreign company had already been turned into taxable income.

Though supporters and opponents wanted the nation’s top court to use the widely-watched case as a chance to wade into the legality of wealth taxes, the majority refused to enter the fray.

. . .

The decision on the Moore v. United States may not have dug into wealth taxes, but the fact that the court even agreed to hear the case should be a warning sign that it’s ready to step in next time, said Leila Carney, a Member at the law firm Caplin & Drysdale.

“If I were in Congress, I would say ‘OK, I’ve been told how far I can go. I’m going to push the limit on this, but I know what’s going to be a bridge too far,’” Carney said.

The ruling is also a warning shot to entrepreneurs about Congressional power to tax their foreign investments, she noted.

. . .

The Supreme Court majority may have avoided getting too deep on wealth-tax hypotheticals, but the real-world chance of lost tax revenue weighed heavy, Carney said.

“In this case, it was probably true there was a serious risk to huge swaths of the tax code. I think the court really bought into that and took it seriously and realized it bit off more than it could chew in this case,” Carney said.

To view the full article, please visit MarketWatch's website (subscription required).