The Lawsuit You Never Heard of Could Upend Your Life

The U.S. Supreme Court has a sordid history, with only brief flashes of morality and honesty.

Following a sad tradition of supporting extremism, bigotry, and personal greed.

It has legalized slavery, counted blacks and women as less than human, denied the words “well-regulated militia” exist, approved civil asset forfeiture without due process, and approved forced sterilization of the mentally feeble.

SCOTUS legalized the internment of Japanese Americans, uninhibited use of eminent domain taking, approved Jim Crow laws, and recently, denied women control over their bodies.

SCOTUS ruled that money is speech, so those with the most money were given the constitutional right to the most speech.

And then, there was Bush v. Gore, a flat-out contradiction of the Constitution.

So yes, far too many crooked, immoral, greedy, and even stupid justices have populated many terrible Supreme Courts. The current one follows that sad tradition.

My reading of the current Supreme Court is that it will continue to fail the morality/honesty test and will invent ever more twisted reasons to justify decisions reflecting the following concepts:

1. If something benefits the rich, the Court’s right-wing likes it.
2. If something benefits the rich at the expense of the poor, they love it.
3. If something benefits the rich, punishes the poor, and personally benefits certain members of the Court, they positively adore it.

Call me a pessimist if you will, but Moore vs. the United States will test the Court’s morality and honesty yet again, and I predict the Court will find a way to fail the test.

Excerpts:

Moore vs. the United States.
The Roosevelt Institute and the ITEP report warned that the Supreme Court’s ruling could even affect social programs and the federal deficit.

The decision can affect social programs only if one wrongly believes federal taxes fund federal spending.

While state/local taxes fund spending by these monetarily non-sovereign entities, federal taxes do not fund spending by the Monetarily Sovereign U.S. government.

Even if all federal tax collections, including FICA, fell to $0, the federal government could continue its deficit spending forever.

“In Moore, the Roberts Court could decide with the stroke of a pen to simultaneously forgive big business decades of tax dues, increase the federal deficit over the long run, jeopardize future public revenue and essential social programs, escalate these multinational companies’ already sizable after-tax profits, and further enrich their shareholders,” the report authors wrote.

Contrary to popular wisdom, Social Security and Medicare are not funded by federal taxes. They are financed by dollars created ad hoc with the press of computer keys.

As for the federal deficit, it is necessary for economic growth. When the deficit fails to grow, we have recessions and depressions. The federal deficit is the private sector’s income. Concerns about the federal deficit are based on ignorance of federal finance.

Corporate profits create economic growth, and enriching shareholders is fine if the government also will spend to enrich the poor (via Social Security for All and Medicare for All).

The Supreme Court will hear the upcoming case, scheduled for December. It could potentially have far-reaching implications on the United States tax structure.

 The case deals with whether the U.S. Constitution’s 16th Amendment authorizes Congress to tax unrealized sums without apportionment among the states.

Charles and Kathleen Moore are minority shareholders in an Indian farming firm, and they have disputed a provision in the Tax Cuts and Jobs Act passed by Congress in 2017 after the IRS presented them with a $15,000 bill for their investment.

The Moores argue the reparation tax is not on income and violates the 16th Amendment that requires direct federal taxes to be apportioned among the states. After losing a suit in the District Court in Washington state in 2022, the Moores’ dispute will be heard by the Supreme Court.

The Roosevelt Institute and the ITEP explained that before the Tax Cuts and Jobs Act, American individuals and corporations “owning stock in a foreign corporation were allowed to defer payment of U.S. tax on profits generated by the offshore company until those profits were ‘repatriated.’”

Because this is a tax benefit taken mainly by wealthy investors, one might expect the right-wing Supreme Court to rule in favor of the Moores.

If the high court sides with the plaintiffs, almost 400 multinational corporations could collectively receive $271 billion in tax relief.

The U.S. federal government, being Monetarily Sovereign, neither needs nor uses any form of income, including tax income. When this income originates with U.S. taxpayers, it represents a dollar reduction from the private sector and, therefore, is recessive.

On the other side of the coin is that most taxpayers will be among the rich, so the tax would help narrow the Gap between the rich and the rest.

So, we have a conundrum. Is stimulating economic growth or narrowing the Gap more economically beneficial?

The report noted Chief Justice John Roberts and Associate Justice Samuel Alito are said to own stock in 19 companies that could receive a combined $30 billion if the court strikes down the repatriation tax.

Aha. That would seem to be the closing argument. In the unlikely event that the SCOTUS justices have any remaining morality, Roberts and Alito would recuse.

I suspect Roberts still has a modicum of ethics. I doubt Alito has any. If they decide to recuse, it probably will be because Roberts embarrassed Alito into gritting his teeth and going along.

If they don’t recuse, Alito and the rest of the right-wing gang will have won the cage match race to the bottom.

The report also argues that depending on the scope of the decision, the Supreme Court could “supplant Congress as a major American tax policymaker, putting at legal jeopardy much of the architecture of laws that prevent corporations and individuals from avoiding taxes, and introducing great uncertainty about our democracy’s ability to tax large corporations and the most affluent.”

Laws that allow the rich to avoid taxes are like roast beef for starving SCOTUS justices. Who will take them on those free junkets if the rich get angry with them?

The federal government is not funded with tax dollars. It creates its own funding by pressing computer keys. Taxes control the economy by taxing what the government wishes to encourage and giving tax breaks to what the government wishes to reward.

Taxes also create demand for the dollar by requiring tax payments to be in dollars.

The actual function of federal taxes is to enrich the rich by widening the Gap between the rich and the rest. “Rich” is just a comparative, not an absolute term. The wider the Gap, the richer are the rich.

The rich pay a much smaller percentage of their income and wealth than the poor, so today’s tax law widens the Gap and makes the rich richer.

While taxing businesses is anti-growth, taxing the rich (i.e., eliminating tax dodges) would narrow the Gap.

Common Dreams wrote about the report on Moore v. United States and said that while justices could take a narrower view on specific parts of the Moore case, a broader ruling could protect individuals from a wealth tax.

There are many problems with a wealth tax — what constitutes “wealth,” how is it measured, how would a home, a bank account, or company stock be measured for tax purposes. The biggest problem is that, as with current tax laws, the rich would influence (i.e., bribe) Congress to answer those questions in their favor.

The Manhattan Institute, one of eight conservative advocacy groups that filed amicus briefs urging the Supreme Court to hear the Moores’ case, argued in a filing that “the case presents the court with an ideal opportunity to clarify that taxes on unrealized gains, such as wealth taxes, are direct taxes that are unconstitutional if not apportioned among the states.”

On balance — and there are two strong sides to this — I will agree with the conservatives if they rule in favor of the Moores. While state and local taxes are necessary to fund state and local government spending, federal taxes don’t support anything.

In my view, the best federal tax is no tax.

SUMMARY

Remember the three points at the start of this post: If something benefits the rich, the Court’s right-wing likes it. If something benefits the rich at the expense of the poor, the right wing loves it. If something benefits the rich, punishes the poor, and secretly benefits certain members of the Court, they positively adore it.

See whether any justice recuses. Then, see the decision and who votes for what. That will demonstrate much about this SCOTUS.

My guesses:

The right wing will back Moore and the rich. Their obligations to the rich and powerful are too strong to break.

Roberts and Alito won’t recuse, though, for appearances, they might dump their stock shares (and repurchase them later.) Those posh vacations on yachts and private planes may be too much fun to give up.

And hey, they have lifetime jobs, so let the peons complain.

I’d like to be proven wrong on this. The only solution is term limits and a morals clause similar to what every other judge in America must follow.

Rodger Malcolm Mitchell
Monetary Sovereignty

Twitter: @rodgermitchell Search #monetarysovereignty
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