Sounding Alarms and Waving Flags about Moore v. US

Next week, the Supreme Court will hear oral arguments for Moore v. United States. At the eleventh hour, this seemingly esoteric case is starting to get “Moore” attention from the broader public, which is a welcome development considering the damage it could do in the fight for tax justice in America.

For several months, the Patriotic Millionaires have been sounding the alarm over Moore v. United States. If you remember, we first told you about the case back in July shortly after the Court announced they had agreed to hear it. Since then, the Moores’ suit has mostly generated buzz in tax law circles. But the importance of this case meant we needed to start making some noise and drawing attention to it in the mainstream media. In August, our Chair, Morris Pearl, penned an op-ed about the case for The Messenger and, in October, our Senior Tax Policy Advisor, Bob Lord, co-authored a similar op-ed with Alex Aronson for Slate.

It’s been a long road, but we like to think people are finally starting to pay attention. This week alone, The HillVoxand The Washington Post (who gave us a nice shout-out for our work!) all spotlighted the case and the ways in which it could totally upend the American tax code as we know it.

For this week’s Closer Look, we want to give you a refresher on the case and its potential impact to prepare you for next week’s oral arguments. We also want to highlight some recent revelations that have come to light about the plaintiffs, which raise serious and pressing questions about the case’s entire legitimacy.

Background of Moore v. United States

Moore v. United States was brought by Charles and Kathleen Moore, a married couple from Washington, over the constitutionality of the mandatory repatriation tax (MRT) enacted as part of the 2017 Tax Cuts and Jobs Act (TCJA). Stick with us, it’s going to get complicated!

The MRT was a one-time tax levied in 2018 on the offshore profits of controlled foreign corporations (CFCs), i.e. foreign companies majority-owned by Americans. Before the MRT, US shareholders only paid tax on active business earnings of CFCs when they were distributed to them as dividends. Consequently, CFCs would earn profits – or “realize” income – and reinvest a large portion of those profits in their businesses instead of distributing them to shareholders. This deferred taxation for their (mostly corporate) US shareholders until the time of distribution.

The TCJA adopted what’s known as a territorial tax system, under which corporate shareholders of CFCs largely are not taxable on the earnings of those corporations. The MRT was needed to allow for the transition to the new system under TCJA. Specifically, all of the earnings of CFCs that had not been distributed prior to the effective date of the TCJA had to be addressed. One analysis estimated that CFCs had more than $2 trillion in reinvested earnings that had gone untaxed since 1986. With the passage of the MRT, substantial (10 percent or more) shareholders in CFCs had to pay a one-time tax on all of their deferred income from 1986 to 2017.

Charles and Kathleen Moore were two of the handful of American individuals impacted by the MRT. (Most shareholders affected in this instance were corporations.) Back in 2006, the Moores invested $40,000 in their friend’s India-based company, KisanKraft. Between 2006 and 2017, KisanKraft turned a profit but reinvested its earnings back into the business, which meant that the Moores never paid tax because they never received payouts in the form of dividends. Then, in 2018, the MRT hit the Moores with a $14,729 tax bill, proportional to their share of the company’s earnings ($132,512) that had gone untaxed over the years.

The Moores were unhappy with the MRT and took the government to court to challenge its constitutionality. They contend that income taxes as allowed by the 16th Amendment apply only to realized income, which in their view is strictly money received in a literal and physical sense by shareholders. Because this didn’t occur in their case, they argue that the MRT is an unconstitutional “direct tax,” i.e. it is not apportioned among the states according to their populations as required by the Constitution.

Billionaire Influence and Potential Impact

Because the Supreme Court receives so many petitions to review lower court decisions, they have to prioritize which cases they do ultimately decide to hear. As a result, the Court traditionally only grants hearings in cases involving the most consequential issues or in which there is disagreement among lower courts.

By these criteria, Moore v. United States is an odd fit. The MRT is not exactly a hot button issue to most Americans and there was no circuit court disagreement in this case. So why, you may ask, did the Court agree to hear the case?

The answer is simple: because the Justices’ billionaire friends wanted them to. Specifically, billionaires want to take advantage of the opportunity they have with a majority-conservative Court sympathetic to their interests, (wrongly) characterize the MRT and all taxes on wealth and unrealized capital gains as unconstitutional, and ultimately crush proposals to tax wealth and unrealized capital gains before they have a chance to become realities.

Don’t believe us? Just look at the eight groups that filed amicus briefs that urged the Court to take on the case. One of them is the Manhattan Institute, which has ties with Harlan Crow (the now infamously generous billionaire friend to Justice Clarence Thomas) and Paul Singer (another infamously generous billionaire friend to Justice Samuel Alito). All eight groups also have documented ties to Leonard Leo, conservative billionaires’ go-to middleman who more or less singlehandedly designed the conservative supermajority we now have on the Supreme Court. As it happens, today, both Leo and Crow were officially subpoenaed by the Senate Judiciary Committee as part of their probe into ethics controversies at the Supreme Court.

Important to note is that virtually no one outside of the Moores and their ultra-conservative friends question the constitutionality of the MRT. The US has plenty of taxes that look through businesses (including S-corporations and partnerships) and tax owners on the income received by their companies. Federal courts, including the Supreme Court, have also heard cases involving taxes that operate in a manner similar to the MRT in the past and have never questioned the constitutionality of those taxes. In September, even former House Speaker Paul Ryan – one of the main architects of the 2017 TCJA – voiced his support for the constitutionality of the MRT.

Should the Justices rule in favor of the Moores, the economic fallout would be tremendous. It could upend huge swaths of the tax code and, perhaps worst of all, could effectively kill several popular proposals to tax wealth – like our very own OLIGARCH Act – and unrealized capital gains – like President Biden’s Billionaire Minimum Income Tax and Senator Wyden’s Billionaires Income Tax – before they even have a chance to get off the ground.

Recent Revelations

Last month, Tax Notes published a bombshell report which outlined several inaccuracies and/or misrepresentations in the Moores’ filings. They are the following:

  • Claiming that Charles Moore was “without any role in KisanKraft’s management.” This is categorically untrue, as Mr. Moore served as director of KisanKraft for five years.
  • Claiming that KisanKraft did not “distribut[e] a penny to [the Moores]…” This is also untrue, as Mr. Moore was reimbursed a total of approximately $14,000 by KisanKraft for four trips that he took to India. The Moores also gave a $245,000 loan to the company, which was repaid at a 12% interest rate.
  • Claiming that “The Moores never received any distributions, dividends, or other payments from KisanKraft.” This is also untrue because the Moores sold shares in the company back in 2019. A new report out from Tax Notes yesterday indicates that they may have made up to $284,000 from the transactions.

The Patriotic Millionaires sent a letter to the plaintiffs’ attorneys, David Rivkin and Andrew Grossman of BakerHostetler LLP, urging them to correct these factual errors in their filings and noting that they had an obligation to do so under applicable ethical rules. If the name Rivkin rings a bell, you’re not going crazy – he’s the attorney we told you about back in August who published a glowing interview with Justice Alito in The Wall Street Journal. There have since been calls for Justice Alito to recuse himself from the case because of his ties with Rivkin – not to mention Paul Singer, as well – but he has thus far refused.

As of this writing, we have not received a reply from Rivkin and Grossman, nor have corrections been made to the Moores’ filings. This inspired us to send a letter directly to the Supreme Court, where we called on them to dismiss the case entirely on account of these inaccuracies and other grounds. We hope that they read it and take our allegations seriously, lest they further erode public trust in our nation’s highest court.


There is a lot at stake with Moore v. United States. We’ll have more to say after oral arguments are finished next week, but it’s critical that the media, Congress, and the Court all understand the potential impact of this case. We’re going to to keep beating the drum.

The Roberts Court has shown that they aren’t afraid to throw precedents out the window if and when it pleases them, which is particularly concerning with a case like Moore that has a long trail of precedents following it. Rest assured, no matter how things turn out, the Patriotic Millionaires will continue to fight the good fight to protect our democracy from the ever-increasing influence of oligarchic billionaires.

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