The $15,000 Tax Case that Could Cost Women Billions

If Congress is blocked from taxing the ultra-rich, it will become even harder to convince policymakers to invest in women-friendly policies, like childcare, affordable housing and paid leave.

A ‘March on Billionaires’ event on July 17, 2020 in New York City. (Spencer Platt / Getty Images)

What if I told you that one of the most important upcoming Supreme Court cases for women’s economic security involved an Indian farm equipment company and a $15,000 tax bill?

On Dec. 5, the Supreme Court will hear Moore v. United States, which could dramatically limit the government’s ability to raise revenue for critical priorities, including childcare, disability care, affordable housing and paid leave. It could also widen an already gaping wealth gap for women and people of color, particularly single Black women and Latinas, who own 9 cents for every dollar of wealth owned by a single white man.

The case is being brought by Charles and Kathleen Moore, who own a small stake in an Indian manufacturing firm. Due to a provision in the 2017 Trump tax law, the couple was directed to pay a one-time tax of $15,000 on the profits of their investments. Rather than do so, they are challenging the law.

Essentially, the couple is arguing that this tax is unconstitutional under the 16th Amendment—which affirms that the federal government has the authority to collect income taxes. They are claiming that their share of the profits from the Indian farm company doesn’t fall within the legal definition of income.

Unless you’re a tax lawyer, this technical legal question may not only seem dry, but also irrelevant. So why should women care about this case?

The reason that women should care is because even a narrow ruling in favor of the Moores could upend our existing tax code—leading to the loss of billions or even trillions of dollars in federal revenue.

Other courts have rejected the Moores’ arguments, in part to prevent this chaos. Many tax experts, and even Republican lawmakers who drafted and enacted the provision in the first place, have publicly stated that they think the challengers are way off base.

What’s more, the Moores went even further by asking the Supreme Court to rule that legislative efforts to tax billionaires are unconstitutional.

To be clear, the Moores are asking the Court to rule on the constitutionality of future laws that have not harmed them in any way—in part because they don’t exist yet. The Supreme Court has no business weighing in on a hypothetical law that is not yet on the books and doesn’t impact the plaintiffs, but we have seen these justices overreach before.

As it stands today, our tax code already fails to fairly tax income from wealth, compared to income from work, which provides a huge benefit to those at the top. It’s why billionaires pay a lower effective tax rate than many working people. In fact, some billionaires, including Elon Musk and Jeff Bezos, have successfully exploited loopholes that allowed them to pay zero dollars in federal income tax in some years.

The Moores are asking the Court to rule on the constitutionality of future laws that have not harmed them in any way—in part because they don’t exist yet.

This inherent unfairness at the heart of the tax code comes at the expense of women and people of color, who are underrepresented among the billionaires who benefit the most. This unfairness deprives the federal government of tax revenues that could be invested in ways that support our collective success and wellbeing, especially for those who have been historically shortchanged by our economic systems and structures.

Speaking of inherent unfairness—there are also major ethical questions that have emerged surrounding this case. 

Justice Samuel Alito sat for two interviews with one of the attorneys for the Moores, while the justices were considering whether or not to hear the case. The attorney’s access to Alito raises concerns over Alito’s ability to serve impartially in the case. While some have called for Alito to recuse himself from this case, he declined to do so, which is a decision that is entirely his to make without any review process. 

Despite these pesky ethical issues, it is still entirely plausible that the conservative justices rule that certain taxes on wealth, or taxes on income from wealth, are unconstitutional. 

If that happens, it will be a devastating blow for women everywhere. If Congress is blocked from imposing certain kinds of taxes on the ultra-rich, it will lose a critical mechanism for raising more revenue, making it even harder to persuade policymakers to invest in universal childcare, affordable housing, paid leave and more.

Investing in these priorities would allow more women and people of color to enter and stay in the labor force. It would give women with caregiving responsibilities, and those who make up the care workforce, a level of support and economic security that they have long deserved.

When women are not living paycheck to paycheck, they can save for the future and build wealth, which would narrow gender wealth gaps. These investments would also provide employers with a more stable workforce, foster economic growth, and create a more stable economy. 

This is all to say that there is much more at stake than a $15,000 tax liability. This case could undermine future efforts to create a more equitable tax code, which in turn, will make it that much harder to create an economy that works for women, families, and all of us—not just billionaires.

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Amy Royce is senior counsel for income security at at National Women Law Center, where she works to advance federal policies to increase economic security for women. Prior to joining NWLC, she served as a presidential appointee as the special assistant to Commissioner David Kladney at the U.S. Commission on Civil Rights.