Joining us now once and for all,
Join us now to talk more about next week's Supreme
Court case and the possible outcomes.
Former Democratic US Senator John Bro.
He's now a spokesman for saving America's family enterprises.
So long time Democrat doesn't want a wealth tax.
See that none of this is clear clear cut.
I don't think Senator and Daniel Bunn is the president
and the CEO of the Tax Foundation.
Are you guys on opposing,
have opposing opinions on this?
Let me start with you,
Dan. What did the Supreme Court do?
Thanks so much for having me.
I think what's at stake here is very similar to
what Paul Ryan described.
I'm not in favor of a wealth tax,
but you could blow up significant portions of the income
tax
if the Supreme Court rules too broadly on this issue,
putting at stake billions if not trillions in U.S.
tax revenue. And a lot of this boils down to
the complexity of taxing income.
And when you've got definitions
in the tax code that attribute earnings to shareholders,
attribute earnings to closely hold held business owners,
you've got to be able to tax those earnings
if you're working within an income tax.
And I think this case could blow up a lot
of those issues and create mountains of litigation if not
decided more narrowly to forestall a wealth tax.
Senator, you obviously represent a lot of small businesses and
we've heard what would happen if there was a wealth
tax or a tax on unrealized gains.
I I don't know the the consequences unintended of that
would be significant.
But are you do you understand
what the other side is saying about how it would
disrupt current tax law or is it worth it to
get the wealth tax off the table once and and
for all?
Joe, our association, the Safe Coalition,
believes everybody should pay their fair share of taxes.
But if we want to raise more revenues,
there's a lot of ways we can do it that
are constitutional.
And one of them we would suggest is the tax
cap.
That's $680 billion a year in unpaid taxes
on laws that are illegal and constitutional and already on
the books.
But the 16th Amendment was very clear,
Joe. It said simply that the Congress can tax individuals
on income that they derive.
In the Moore case, they never got a dime.
The company they invested in made a lot of money,
but they kept the money in India and the Moors
never got a dime from their investments at that point.
And and the 9th Circuit Court of Appeals said,
well, we're going to tax it anyway and you can't
tax
people's income on income that they haven't received.
It's kind of a guest tax.
We're going to guess what you owe.
We're going to tax you on it.
What do you think of that Daniel?
We heard maybe they did have a loan or some
type of benefited in some way from the
from the company. Is it more complex than what the
Senator just described?
It's both more complex and more simple.
This is a pass through entity.
The Moores owned more than 10%
in shares of that entity and the US tax code
says that they should be attributed income from that entity.
Now, prior to 2017, they were able to defer taxes
on that income until it was repatriated.
But as part of the
2017 Act, there was a discount rate applied to accumulated
deferred earnings,
and that was the rate that the Moores had to
pay.
And this is just the,
you know, the challenge of saying,
well, it's income, it's offshore.
Well, the Congress decided to include that income as part
of the 2017 reform and to be able to go
forward with a different system,
different treatment of foreign earnings.
What about that, Senator? Well,
the law that they passed in 2017
in the Trump administration is unconstitutional in the sense that
portion of it that says you can tax people on
income that they've never received.
Can you imagine people saying I'm going to have to
pay taxes on money that I never got?
And the 16th Amendment was very clear
following Supreme Court decisions, also substantiated that you can only
tax income that an individual received.
They got a loan from the company,
they paid it back. They were reimbursed for travel expenses
that they had already paid.
They never got a dime in income.
And you can't tax what you don't have and they
never got any money.
And that's the principle of this case.
If there are other laws on the books that fail
to meet the constitutional requirements,
well, they should be taken down.
But in this case, this specific case,
I think it's very clear that what the courts did
the lower courts is unconstitutional and I think will be
declared so.
So Dan, you're not for
a a wealth tax obviously.
Do you do you have a a
way or or any changes in the tax code that
that gets out that would get at some of that
money That's never been touched.
People that have, you know,
they have never paid taxes on on billions that that
they've accrued.
So I'm not in favor of a wealth tax.
A wealth tax is economically harmful.
There's all kinds of research that Tax Foundation has done
on that issue.
And I think when it comes to the deferred earnings,
the US tax system for a number of years allowed
companies to defer taxation of their foreign earnings.
And this created incentives for companies.
Not saying that the Moores did this,
but a lot of companies
to put their earnings offshore or keep those earnings offshore
rather than bringing that home And our
35% corporate tax rate encourage that behavior as well.
But the reform and as part of the reform you
had to tax those earnings unless it
otherwise you would be, you know,
essentially forgiving deferred tax for a lot of companies.
And the reform provided A reduced rate to tax those
deferred earnings.
I, you know, I, I think a lot of this
boils down to the income tax.
I'm in favor of moving the tax code to a
consumption tax rather than relying on the complexities of an
income tax.
But these were earnings, that there was taxation deferred that
Congress then said no,
the tax is now due at a reduced rate.