Washington, D.C. – The Supreme Court of the United States ruled on Thursday to uphold a one-time tax on offshore earnings that was implemented as part of President Donald Trump’s 2017 tax package. This decision marked the end of a lawsuit challenging the provision, with the court citing Congress’s limited powers of taxation as the basis for their ruling.
The lawsuit, brought forth by a Washington couple and backed by the Competitive Enterprise Institute, aimed to block the tax on offshore earnings, arguing that it was unconstitutional. The couple faced $15,000 in taxes due to investments made in a company based in India, triggering the one-time tax on certain offshore earnings previously exempt from taxation.
Justice Brett M. Kavanaugh, writing for the majority, expressed that eliminating the tax provisions in question could have severe repercussions on the nation’s tax system, potentially leading to drastic cuts in critical programs or increased taxes on ordinary Americans. The ruling was joined by Chief Justice John G. Roberts Jr. and three liberal justices, Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson.
The decision received support from an unexpected political coalition, including the Biden administration and conservatives like former House speaker Paul D. Ryan, who emphasized the importance of maintaining existing taxes on investments, partnerships, and foreign income. The court’s ruling ensured that Congress could continue to exercise its power to tax income and ensure that all taxpayers, including multinational corporations and wealthy individuals, pay their fair share.
The ruling on the offshore-earnings tax comes amidst a Supreme Court term marked by ongoing ethical concerns and a series of high-profile cases yet to be decided. Justices are expected to deliver several major decisions regarding issues such as Donald Trump’s potential prosecution for alleged election interference, charges against Capitol rioters, access to emergency abortion care, and the future of free speech on social media platforms.
Overall, the Supreme Court’s decision to uphold the tax on offshore earnings represents a significant victory for the Biden administration and proponents of progressive tax policies, reaffirming the government’s authority to levy taxes in the interest of all taxpayers.