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Supreme Court to hear major case that could upend tax code and doom "wealth tax" proposals (www.cbsnews.com)

submitted 7 months ago by MicroWave@lemmy.world to c/news@lemmy.world

36 comments fedilink hide all child comments

The Supreme Court is poised to hear arguments Tuesday in a closely watched case that some warn could have sweeping implications for the U.S. tax system and derail proposals from some Democrats to create a wealth tax.

The dispute before the justices, known as Moore v. United States, dates back to 2006. That year, Charles and Kathleen Moore made an investment to help start the India-based company, KisanKraft Machine Tools, which provides farmers in India with tools and equipment. The couple invested $40,000 in exchange for 13% of the company's shares.

KisanKraft's revenues have grown each year since it was founded, and the company has reinvested its earnings to expand the business instead of distributing dividends to shareholders.

The Moores did not receive any distributions, dividends or other payments from KisanKraft, according to filings with the Supreme Court. But in 2018, the couple learned they had to pay taxes on their share of KisanKraft's reinvested lifetime earnings under the "mandatory repatriation tax," which was enacted through the Tax Cuts and Jobs Act, signed into law by President Donald Trump the year before. The tax was projected to generate roughly $340 billion in revenue over 10 years.

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[–] apes_on_parade@lemmy.whynotdrs.org 1 points 7 months ago

Replace "teller" with "bank" because we are talking about legal ownership, not physical control.

They don’t have anything but a responsibility to care for it

While they absolutely "have a responsibility" to you, they also benefit from holding it, so your "anything but" rhetoric is incorrect. Brokers and banks alike earn money by lending the assets the have, despite their corresponding liabilities.

Do you think there isn’t a “clear record” without direct registration (from your other comment)

Correct. Legally, you have a "security entitlement". Per UCC 8-503, the property interest you have a result of this entitlement is merely "a pro rata property interest in all interests in that financial asset held by the securities intermediary", i.e. what your broker actually has, which is (a) opaque to you as a customer, and (b) is fundamentally difficult even for them to pin down - as it is composed primarily of their DTC account balance, ideally but they undoubtedly have many derivatives, transactions to settle (which can extend beyond 2 days because FTDs are common), shares lent out that are due to them, etc. So while the number of security entitlements in your account has a clear record, your property interest in the issuer does not have a clear record.