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Accessibility statementSkip to main contentDemocracy Dies in DarknessSign inDemocracy Dies in DarknessPoliticsBiden administration The Fix The Briefs Polling Democracy in America Election 2024 PoliticsBiden administration The Fix The Briefs Polling Democracy in America Election 2024 Supreme Court upholds Trump-era tax provision on offshore earningsSome viewed the challenge to the one-time tax on offshore earnings as an effort to preemptively block Congress from creating a wealth tax.By Ann E. MarimowUpdated June 20, 2024 at 11:14 a.m. EDT|Published June 20, 2024 at 10:06 a.m. EDTThe U.S. Supreme Court. (Kent Nishimura for The Washington Post)Listen4 minShareComment on this storyCommentAdd to your saved storiesSaveThe Supreme Court on Thursday rejected a challenge to an obscure provision of President Donald Trump’s 2017 tax package, ending a lawsuit that many experts feared could destabilize the nation’s tax system.In a divided decision, the court upheld a one-time tax on offshore earnings that helped fund the massive tax cut, saying it was permitted under Congress’s limited powers of taxation.Some viewed the lawsuit as an effort to preemptively block Congress from creating a wealth tax.Writing for the majority, Justice Brett M. Kavanaugh said the challenge to the tax on offshore earnings could have rendered “vast swaths of the Internal Revenue Code unconstitutional.”“Those tax provisions, if suddenly eliminated, would deprive the U. S. Government and the American people of trillions in lost tax revenue,” he wrote. The implications of the challengers’ argument, he added, would have required Congress to “either drastically cut critical national programs or significantly increase taxes on the remaining sources available to it — including, of course, on ordinary Americans. The Constitution does not require that fiscal calamity.”AdvertisementJustices Clarence Thomas and Neil M. Gorsuch dissented.Skip to end of carouselSupreme Court 2024 major casesWe’re tracking the major Supreme Court cases of 2024.End of carouselThe ruling landed near the end of a Supreme Court term that has been unusually slow-moving and marred by fresh ethics questions.The justices plan to deliver a slew of major decisions by the end of June or the first days of July, including whether and when Donald Trump’s prosecution for alleged election-interference can proceed in D.C.; the viability of a key charge against the rioters who attacked the U.S. Capitol on Jan. 6, 2021; access to emergency abortion care and the future of free speech on social media platforms.It is rare for so many high-profile cases to remain undecided this late in the term. Metal barricades lined the streets outside the court on Thursday, a show of heightened security that reflected the potential for protests. The justices return to the bench Friday to deliver more opinions, starting at 10 a.m.AdvertisementAn unusual political coalition defended the offshore-earnings tax at issue in Thursday’s ruling, from the Biden administration to conservatives including former House speaker Paul D. Ryan. Not because they favor a wealth tax, but because they worry a ruling against one little-known provision could undermine vast swaths of existing taxes on investments, partnerships and foreign income, which together raise billions or even trillions in revenue.The lawsuit was initiated by a Washington couple backed by the Competitive Enterprise Institute, an anti-regulatory advocacy group. Charles and Kathleen Moore were subject to $15,000 in taxes because of the 2017 law, springing from investments they had made in a company based in India that supplies equipment to small-scale farmers. The law created a one-time tax on certain offshore earnings that had previously been exempt from taxation unless the taxpayer brought the money back to the United States.The Moores told the court they never earned any money from their investment, and they sued the federal government seeking a refund. The district court dismissed their case, and the U.S. Court of Appeals for the 9th Circuit upheld that decision, saying the tax was within Congress’s power and permitted under the 16th Amendment regardless of whether the Moores took in, or “realized,” any income.AdvertisementThe specific tax that the Moores object to paying, known as Section 965, was forecast to raise more than $300 billion over 10 years. Some major corporations have already paid billions under this specific tax; a ruling that struck it down entirely might mean the government has to issue tens of billions of dollars in refunds.Some tax experts said the Moores were more involved in the company than they disclosed in court filings and urged the court not to decide the constitutional question based on an inaccurate, incomplete record. One of the couple’s lawyers defended the record as accurate and candid.At oral argument in December, in the case known as Moore v. United States, several justices said the tax on certain offshore earnings was substantially similar to other major forms of taxation, including on income earned by business partnerships, limited liability corporations and other offshore income.This is a developing story. 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