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moore v united states
Billionaires Buy Governments to Avoid Paying Their Fair Share in Taxes
In legislatures, the courts, and our executive offices, we have a system rigged in favor of the ultra-rich, rigged by everything from acts of Congress and judicial rulings to IRS budgets and audit policies.
Aug 03, 2024
By all appearances, former U.S. President Donald Trump has cut a sweet deal with a dozen or two of America’s richest billionaires: Finance his campaign and he’ll keep their federal taxes super low—or even lower them—once he’s sitting back in the White House.
How much do billionaires like this deal? This much: In April, hedge fund billionaire John Paulsen held a Palm Beach fundraiser for Trump that brought in $50.5 million. Immediately after Trump’s late May conviction on 34 felony counts in Manhattan, Timothy Mellon, the grandson of the classic plutocrat Andrew Mellon, ponied up $50 million. Miriam Adelson, the billionaire widow of Las Vegas kingpin Sheldon Adelson, appears eager to kick in as much as $100 million.
This past spring, meanwhile, billionaires Elon Musk and David Sacks reportedly held a secret dinner party for Trump, with attendees including the illustrious deep pockets Peter Thiel, Rupert Murdoch, and Michael Milken.
The rich themselves have actually become more brazen about avoiding taxes. Just try to stop us, they seem to be saying.
America’s billionaires clearly see politics as one route to ensuring they pay as little as possible at tax time. But they don’t just make their presence felt at election time. America’s rich have their thumbs firmly on the scale of all three branches of government. In legislatures, the courts, and our executive offices, we have a system rigged in favor of the ultra-rich, rigged by everything from acts of Congress and judicial rulings to IRS budgets and audit policies.
Some of this rigging we can all easily see. The dividends and long-term capital gains of the ultra-rich have for decades faced a maximum tax rate barely half the maximum rate applicable to other forms of income. And the investment income of the rich, unlike the paychecks of working people, faces no Social Security tax.
In 2017, the first year of the Trump presidency, intense lobbying efforts helped rich business owners to a special tax rate for their business income. In 2018 alone, according to ProPublica, that special rate translated into a $67 million gift to Mike Bloomberg, whose personal wealth now reportedly exceeds $100 billion.
But these glaring privileges the rich enjoy at tax time only tell part of the billionaire tax story. Other parts get precious little attention. In 2004, for instance, lawmakers in Congress enacted a penalty for the failure to disclose potentially abusive tax avoidance transactions on tax returns. The penalty on the surface looked substantial: 75% of the tax sought to be avoided. But Congress capped the penalty at $100,000, a move that turned the penalty into a minor nuisance for billionaires seeking to avoid millions of dollars in taxes.
In our current rich people-friendly tax climate, IRS staff who want to do the right thing face tough going. Recently, for example, one former IRS staffer, Michael Welu, went public with his concerns that the IRS itself has both official and unofficial policies that end up treating audited rich taxpayers much more gently than small business owners.
“I was putting butchers, bakers, and candlestick makers in jail,” Welu told the International Consortium of Investigative Journalists, “but the big stuff we really wanted to go after was being ignored.”
Welu found the upper management of the IRS division tasked with auditing the super rich—and the corporations they run—distinctly uninterested in investigating America’s richest and their “most egregious, ridiculous schemes” for avoiding taxes.
IRS officials like Michael Welu do occasionally speak out. But only tax wonks truly have any real sense of how much obscure tax code penalties and IRS audit policies favor the rich. And most of those tax wonks work for the rich.
The rich themselves have actually become more brazen about avoiding taxes. Just try to stop us, they seem to be saying.
Take the recently decided Supreme Court case, Moore v. United States. Working through an array of right-wing organizations, the conservative mover-and-shaker Leonard Leo attempted to use a challenge to an obscure one-time tax as a vehicle to preempt Congress from ever taxing the wealth or unrealized gains of the ultra-rich. Ultimately, the court decided the case without ruling on whether the rich can be taxed on their wealth or unrealized gains. But the opinions that four of the nine justices handed down made it clear that they stand prepared to do the billionaire bidding should a direct challenge to a tax on the wealth or unrealized gains of billionaires come before them.
Billionaires now have at least three Supreme Court justices firmly in their pockets. Reporting by ProPublica has revealed the massive gifts that have been flowing from Harlan Crow and other billionaires to Justice Clarence Thomas as well as the generous gifts that billionaire Paul Singer has been sending Justice Samuel Alito’s way. Justice Neil Gorsuch has had his entire career, including his appointment to the court, funded by the billionaire Philip Anschutz.
Those three justices, along with Justice Amy Coney-Barret, have now made it patently obvious they will not allow billionaires to be taxed on their unrealized gains or their wealth. Does anyone really think the billionaires won’t have the crucial, majority-making fifth vote from Justice Brett Kavanaugh when they need it?
Republican members of Congress are showing even less shame than our Supreme Court justices. Last year, these GOP lawmakers held the country hostage in negotiations to increase the country’s debt limit. Their price for agreeing to raise the debt limit, thereby avoiding a default on the country’s debt? They demanded—and won—a reduction in a scheduled IRS budget increase that would been used to increase enforcement moves against rich taxpayers.
The purported motive for this legislative hostage taking—“concern” over the federal deficit—made for an absurd justification. The proposed increase in the IRS budget would have been recovered, several times over, through increased tax collections. The IRS budget reductions the Republican lawmakers extracted will, in fact, only increase the federal deficit. But those reductions will serve a political purpose. They’ll protect the GOP’s richest patrons from tax enforcement.
The mainstream media, to no one’s surprise, did a miserable job of exposing this Republican dishonesty in the debt limit negotiations. But at one point in our recent past a courageous soul did emerge to expose the rot in our tax system. What happened? The ultra-rich and their henchmen in Congress make sure that this soul faced a punishment far more severe than any punishment ever meted out to those few rich Americans who actually get caught evading their taxes due.
That courageous soul, Charles Littlejohn, worked as an IRS contractor. He leaked tax return information related to Trump and America’s billionaires to The New York Times and ProPublica. ProPublica used that leaked information to write over 50 stories about billionaire tax avoidance, embarrassing and angering many of our richest in the process. Two of them even brought lawsuits, one against the IRS and the other against Littlejohn’s employer.
Ultimately, Littlejohn pled guilty to one count of unauthorized tax return information disclosure, a crime that carries a recommended sentence of four to 10 months. But 25 Republican members of Congress, undoubtedly at the behest of their billionaire patrons, wrote the judge in the case and urged the harshest possible sentence of five years. The judge obliged, stating in her sentencing remarks that Littlejohn posed a graver threat to democracy than the January 6 rioters. As tax law professor Reuven Avi-Yonah has noted, Littlejohn is now serving a sentence far harsher than any imposed on rich Americans convicted of tax evasion.
Littlejohn’s extreme sentence did not reflect the one single count of unauthorized tax return information disclosure he pled guilty to. That sentence reflects his “crime” of exposing the tax avoidance of the billionaire class.
Try this thought experiment: Imagine if Littlejohn had released the return information of 1,000 or so taxpayers with modest incomes to ProPublica. Imagine that ProPublica had then publicly detailed all the tip income that servers and bartenders among these taxpayers had failed to report and all the social meals that small business owners in the sample had claimed as business expenses. If Littlejohn had then pled to one count of unauthorized disclosure, would 25 members of Congress have intervened? Would the judge have imposed a sentence over six times the maximum recommended in federal sentencing guidelines?
Doesn’t it become dangerous to society when the punishment for a crime depends on who the victim happens to be?
We are now living that danger. Our billionaires sit firmly in control. And they will do whatever it takes to make sure they never pay tax at an appropriate level—even if that means locking a human being up for a preposterously long time just to send a message.
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'Fight Goes On to Tax the Rich,' Says Warren After Supreme Court Ruling
"Right-wing billionaires hoped an obscure legal case would blow up the tax code to avoid paying what they owe, but this effort failed," said the Democratic senator after the Moore v. United States decision.
Jun 20, 2024
Sen. Elizabeth Warren was among the economic justice advocates cheering Thursday after the U.S. Supreme Court upheld a tax on Americans with shares of certain foreign corporations—a win for the Massachusetts Democrat and other wealth tax advocates.
"Right-wing billionaires hoped an obscure legal case would blow up the tax code to avoid paying what they owe, but this effort failed at the Supreme Court," Warren said in response to the 7-2 ruling in Moore v. United States. "The fight goes on to tax the rich, pass a wealth tax on ultra-millionaires and billionaires, and make the system more fair."
Although the narrow decision doesn't explicitly affirm the constitutionality of federal wealth tax proposals from congressional progressives including Warren, court watchers had feared a ruling in favor of Charles and Kathleen Moore—a Washington couple who challenged the mandatory repatriation tax (MRT) in Republicans' 2017 tax law—would disrupt efforts to impose such policies.
The high court heard the case in December. Conservative Justice Brett Kavanaugh on Thursday delivered the majority opinion that the MRT "does not exceed Congress' constitutional authority." He was joined by Chief Justice John Roberts and the three liberals. Justice Amy Coney Barrett concurred in the judgment, joined by Justice Samuel Alito, who had faced calls to sit this case out.
Conservative Justice Clarence Thomas—who has provoked pressure to recuse himself from multiple cases or even leave the court by accepting and not reporting gifts from ultrarich Republicans—dissented, joined by Justice Neil Gorsuch. Thomas argued "the Moores are correct" that "a tax on unrealized investment gains is not a tax on 'incomes' within the meaning of the 16th Amendment, and it therefore cannot be imposed 'without apportionment among the several states.'"
The Roosevelt Institute and Institute on Taxation and Economic Policy (ITEP) warned in a September report that a decision siding with the Moores could have led nearly 400 multinational corporations to collectively receive more than $270 billion in tax relief.
"Today's ruling is a win for anyone who didn't shelter income in offshore tax havens before 2018," ITEP executive director Amy Hanauer said Thursday. "It preserves close to $300 billion of tax revenue paid by some of the biggest and most profitable corporations in human history."
"If the court had retroactively repealed this one-time tax, any other way of making up the resulting shortfall would have fallen far more heavily on middle-and-low-income families and small businesses," she added. "The Supreme Court also could have taken an activist turn of the worst kind by preemptively ruling federal wealth taxes unconstitutional today. To its credit, the court did not do so."
Groundwork Collaborative executive director Lindsay Owens similarly called the ruling "great news," adding that "next year, there is nothing standing in Congress' way to make the wealthy pay up."
Meanwhile, Morris Pearl, chair of the Patriotic Millionaires and a former managing director at BlackRock, had a more mixed response, saying that "we are relieved that the Supreme Court chose not to overreach in its Moore v. U.S. decision. The plaintiffs' patently absurd argument, based on incorrect and seemingly fabricated facts, threatened to upend the tax code and preemptively declare taxes on wealth and unrealized capital gains unconstitutional. The court chose not to do so."
"But we remain deeply alarmed for two reasons. First, it is now evident that four Supreme Court justices are enthralled by the influence of billionaires. In their concurring opinion, Justices Barrett and Alito asserted that unrealized capital gains cannot be taxed, as did Thomas and Gorsuch in their dissent, which said there is a realization requirement for income tax," Pearl said. "These justices have now signaled their intention to declare taxes on wealth and unrealized capital gains unconstitutional."
"Second, the Supreme Court should never have agreed to hear this case in the first place," he continued. "Billionaires are shamelessly buying influence on the Court. While seven Justices rejected this specific attempt by plutocrats to avoid their patriotic duty, this does not change the fact that several members of the Supreme Court have corrupt relationships with billionaire benefactors looking to purchase outcomes on the court."
This post has been updated with comment from the Patriotic Millionaires.
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Watchdogs' Database Details Right-Wing Efforts to Sway US Supreme Court
"Supreme corruption demands supreme transparency," said one campaigner behind the new effort.
Apr 18, 2024
A trio of progressive watchdog groups on Thursday unveiled a new database detailing the "troubling connections" between the U.S. Supreme Court's right-wing justices, the conservative organizations that have intervened in cases before the court, and the wealthy donors funding them.
Take Back the Court, Revolving Door Project, and True North Research published the database at SupremeTransparency.org, which "shines a spotlight on the complex web connecting justices to powerbrokers and the organizations that those powerbrokers fund, lead, and are otherwise linked to."
The watchdogs found that nearly 1 in 7 amicus briefs filed during the 2023-24 Supreme Court term were lodged by at least one powerbroker-affiliated organization. This affects 32 different cases before the court.
"The current U.S. Supreme Court has gone rogue."
For example, in Moore v. United States—in which the Supreme Court could preemptively ban or limit wealth taxes—half of all amicus briefs were filed by groups affiliated with right-wing powerbrokers.
In Loper Bright Enterprises v. Raimondo, groups funded by billionaire industrialist Charles Koch want to scupper the Chevron deference, a 40-year precedent under which judges defer to the legal interpretations of federal agencies if Congress has not passed any laws on an issue. Powerbroker-affiliated organizations have filed more than one-third of the amicus briefs seeking to overturn the Chevron doctrine.
"Far too often people with insidiously close ties to justices like Clarence Thomas and Samuel Alito, such as Harlan Crow and Paul Singer, signal their interest in the outcome of cases by funding, leading, or influencing organizations that file amicus briefs," Revolving Door Project executive director Jeff Hauser said in a statement.
"There is just as much of a conflict of interest when a justice hears a case involving a benefactor as a named party and one in which the person who illicitly enabled their luxurious lifestyle is 'merely' similarly situated to one of the parties," Hauser added.
According to SupremeTransparency.org:
The current U.S. Supreme Court has gone rogue. The right-wing justices that make up the court's supermajority frequently toy with precedent and the rule of law to issue opinions that not only defy the will of a majority of Americans, but also rewrite constitutional principles, overturn widely respected legal precedents, and gut longstanding rules that protect the public interest.
In just the 2021 and 2022 Supreme Court terms alone, the court overturned Roe v. Wadeafter 49 years; gutted both the decades-old Clean Air Act and Clean Water Act; overturned a 100+ year old gun safety law; eroded the National Labor Relations Act (adopted as part of New Deal reforms to protect workers); broke with their own procedures regarding standing to sue in order to block student debt relief; and reversed decades of precedent to end the decadeslong practice of race-conscious college admissions policies that promoted diversity and redressed discrimination. But this radically reactionary court and its radically reactionary justices aren't acting alone.
"Supreme corruption demands supreme transparency," said Take Back the Court president Sarah Lipton-Lubet. "It's no secret that the many of the rich benefactors cozying up to the conservative justices are the same people who fund right-wing organizations with business before the court."
"But too often, stories about the Supreme Court don't connect these dots—and as a result, they leave us with an incomplete picture," she continued. "The truth is right-wing powerbrokers are seemingly paying to play; they're funding groups that are weighing in on court cases even as they buy access to the justices who will rule on those cases."
"It's just one of the ways our Supreme Court is deeply, fundamentally broken," Lipton-Lubet added. "And it's a reminder of how urgent and necessary it is that we reform this corrupt court."
Last year, the Supreme Court adopted a Code of Conduct that contained few new rules, no enforcement mechanism, and was widely panned as a toothless public relations stunt. Bolder proposals for reforming the high court include term limits and increasing the number of justices.
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