The Supreme Court’s 2024 decision in Moore v. United States didn’t exactly break the internet, but in the world of tax law, it might as well have. On its face, the ruling is a narrow affirmation of the Mandatory Repatriation Tax (MRT), which lets Congress tax certain foreign corporate earnings even if U.S. shareholders haven’t seen a dime.[1] The reasoning has many wondering whether the ground has shifted under the traditional rule that income must be “realized” before it can be taxed, while the Court insists its holding is limited.
So, was Moore just a modest clarification, or a backdoor invitation to rethink what counts as income? Let’s dig in.
The Realization Doctrine Gets a Stress Test
First, some history. Under the Sixteenth Amendment, Congress has the power to tax “income.” But what exactly counts as income for tax purposes? The Supreme Court originally answered that in Eisner v. Macomber, holding that income must be “realized,” as in, received or made available to the taxpayer before it could be taxed.[2]
Later, in Glenshaw Glass, the Court expanded that definition, calling income “undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.”[3] In other words: if you get richer and you have control over the money, the IRS gets a piece.
Enter Charles and Kathleen Moore, who owned shares in a profitable foreign corporation but never received any of its earnings. When Congress passed the MRT as part of the 2017 tax reform, they were taxed on those earnings anyway. The Moores argued that this violated the realization principle.[4] The Court disagreed, sort of.
Footnote 2: A Legal Disclaimer in Disguise?
The majority upheld the MRT, reasoning that Congress can tax income realized by a corporation and attribute it to its shareholders under specific rules, even if the shareholders never touched the money.[5] But then came the curveball: Footnote 2, where the Court clarified that the opinion doesn’t address the constitutionality of a wealth tax or other forms of unrealized income taxation.[6]
Basically, the Court said: “We’re not saying Congress can tax all unrealized income, just this kind of unrealized income.” It’s the legal equivalent of eating someone’s fries and saying, “Relax, I’m not touching your burger.”
Still, by accepting attribution-based taxation here, the Court arguably cracks the door for future laws taxing income before it’s in your hands, especially where the taxpayer has ownership, control, or economic benefit.[7]
Tax Avoidance, BEPS, and a Global Game of Keep-Away
Let’s zoom out and shift gears. The Moore decision doesn’t just raise questions about constitutional law, it taps into a global frustration with multinational profit shifting. Every year, corporations shift over $1.38 trillion in profits to low-tax jurisdictions.[8] It’s a sophisticated shell game that leaves tax authorities chasing shadows.
That’s why The Organization for Economic Cooperation and Development (“OECD”) launched its Base Erosion and Profit Shifting (“BEPS”) project: a coordinated global effort to close loopholes and reduce the incentive to park profits in tax havens.[9] The MRT, in many ways, is the U.S. answering that call by taxing offshore earnings before they’re repatriated. This ensures they don’t escape taxation entirely.[10]
While the Supreme Court didn’t cite BEPS in Moore, the policy backdrop is hard to ignore. Both the MRT and BEPS are reactions to the same problem: global companies playing hopscotch across tax borders while local governments miss out on revenue.[11]
Of course, global tax coordination isn’t easy. The OECD’s “Pillar Two” initiative, a global minimum tax, still faces political resistance and patchy implementation. Overall, Pillar Two’s progress is uncertain, and countries like the U.S. are wary of giving up too much autonomy.[12]
Reading Between the Lines (and the Footnotes)
So, what should we make of Moore? The Court insists its decision is narrow, and it probably is. For now, Footnote 2 was a neon sign saying, “We’re not ruling on wealth taxes today.” But the logic behind the majority’s opinion may lay the groundwork for broader theories of income taxation down the road.
After all, if Congress can attribute foreign earnings to shareholders and tax them without distribution, what’s to stop it from doing the same with unrealized domestic gains? Okay, a lot, but still, the framework is there.
Whether future courts will use Moore as a modest precedent, or a constitutional springboard remains to be seen. As the economy becomes increasingly digital, new challenges may surface where Moore proves relevant.[13] In the end, tax law is a space where definitions matter and footnotes can move billions—this ruling is worth more than a passing glance.
[1] Moore v. United States, 144 S. Ct. 1680, 219 L. Ed. 2d 275 (2024).
[2] Eisner v. Macomber, 252 U.S. 189 (1920).
[3] Glenshaw Glass, 348 U.S. at 431.
[4] Moore, 144 S. Ct. at 1688.
[5] Id.
[6] Id. at 1688 n.2.
[7] Jonathan D. Grossberg, The Ramifications of Moore v. United States, Thomson Reuters Tax & Accounting News, https://tax.thomsonreuters.com/news/the-ramifications-of-moore-v-united-states (last visited Mar. 23, 2025).
[8] Tax Justice Network, What Is Profit Shifting?, https://taxjustice.net/faq/what-is-profit-shifting (last visited Mar.
23, 2025).
[9] OECD, Base Erosion and Profit Shifting (BEPS), https://www.oecd.org/en/topics/policy-issues/base-erosion
and-profit-shifting-beps.html (last visited Mar. 23, 2025).
[10] OECD, Tax Challenges Arising from Digitalisation of the Economy – Global Anti-Base Erosion Model Rules
(Pillar Two): Inclusive Framework on BEPS, OECD/G20 Base Erosion and Profit Shifting Project, at 3 (2021).
[11] Deloitte, BEPS Actions, https://www.deloitte.com/global/en/services/tax/analysis/beps-actions.html (last
visited Mar. 23, 2025).
[12] Brendan Bargmann, Ending the Vicious Cycle: Understanding “Pillar Two” and the Uncertain Progress
Towards A Harmonized Global Minimum Tax, 64 Va. J. Int’l Online 1 (2023).
[13] Taxwerx, How the Digital Economy Challenges Traditional Taxation Systems, Taxwerx.
https://taxwerx.eu/how-the-digital-economy-challenges-traditional-taxation-systems (last visited Mar. 23,
2025).